MyDx - Another way to play the marijuana space

This blog is starting to generate some emails, nothing huge, one or two a week.  Last Wednesday Zane wrote and asked me if I'd consider looking into a company called MyDx Inc that trades OTCQB under the appropriate symbol MYDX.OB.  They have created a hand held analyzer that detects chemicals in, you guessed it, Mary Jane. as well as food, water and even air.  It can work in tandem with a smart phone and a downloadable free application.  

I've already written about another interesting Cannabis play in Rocky Mountain High Brands (RMHB.OB) and their Hemp Infused energy drinks, so I figured.....what the hay.  Or perhaps:  "What the hemp" might be a better way of putting it.

Cannabis, Hemp, Marijuana, call it what you want, the sector is getting a lot of...uhm, Buzz.  With California voting in favour of legislation and Canada poised to do the same at the federal level this spring it stands to reason that public companies in this space are going to be attracting a lot of attention.

I'm not going to go in depth on the fundamentals here, regular readers already know my opinion.  I consider all fundamental data to be at least weeks and often times months old. Hence in my view its already "baked" into the share price.  Okay okay, I'll slow down on the Wacky Tabacky quips....they're hard to resist.

MYDX closed this past Friday at .022 cents American, trading on the OTCQB as opposed to the non reporting Pink Sheets which I will not touch.  As of  October 12th of this year there were 150.5 million shares outstanding, giving the company a Market Cap of about $3.3 million.  

There is some promotion going on, which as I've often pointed out is to be expected with development stage companies.  They're profiled at CFN Media Group, a website that specializes in promoting the overall Cannabis space.

http://www.cannabisfn.com/mdc/mydx-inc/

They haven't been around for a long time, with the chart showing trading starting in April of 2015 in the $2 to $3 range.  That's quite a drop, all the way down to just a couple of pennies.  You can see for yourself here:

Two things pop out.  One obviously is the big drop in the PPS, and the second is the explosion of volume starting in September and carrying through to the present.  

According to news released by the company, their application was the number one downloaded free App in IOS App Store in the medical category:

http://finance.yahoo.com/news/mydx-one-app-rockets-top-141100654.html

There's another reason however why I think volume has exploded, and that reason is short selling. As might be expected with a stock trading for less than one single nickel, short interest has been very low....until recently that is.  Up until September the reported numbers of shares borrowed and sold into the market was only a few thousand, forty odd thousand as recently as July.

And then it shot up to almost 200K at the end of August and then to a high of over 2 million as recently as September 30th.  The most recent update has short interest just shy of 1 million current up to Oct. 15th.  So short interest shot up in tandem with the explosion in trading volumes in other words.

That suggests to me that MYDX is now fully "in play".  In my opinion this stock has attracted the attention of the real players, and as such I expect there to be a lot of volatility.  High frequency traders scalping large quantities for small % gains, retail investors buying and holding, penny flipping types riding momentum on swing trades.  And given the minuscule market cap, it strikes me that there is a lot of upside potential here.  

Now full disclosure.  As I write this I have no position in MYDX whatsoever, and as it says at the very bottom of this blog, I have not and will not ever accept payment in any form to write about any stock. With that being said I may very well open up a position in this company, perhaps within the next 48 hours.  

Do note that penny stocks are incredibly high risk investment vehicles.  It is quite possible that one may lose some or all of their investment when buying OTC stocks, so please take special care here. My regular readers know my favourite saying: "Nobody ever went broke by taking profits".  In my view stocks like MYDX are only suitable for risk capital, that is to say money that one can afford to lose.  

Please do your own DD and research and examine your own objectives, be they long term, short term or somewhere in between.  And good luck.  

Resverlogix - Shareholders waiting to see what's in the box

Resverlogix (RVX.TO in Canada or RVXCF in the U.S.) is reminding me of a Christmas present wrapped and under the tree, or perhaps an episode of the game show 'Let's Make a Deal'.

Back on August 22nd the company announced that its Annual General Meeting (AGM) of October 5th 2016 had been cancelled, with no date for rescheduling at that time,and no reasons given. Message board participants reported communications with the company's IR representative as saying no explanation could be given due to disclosure rules, I myself received such an email.

Then on October 6th the company put out a PR announcing the Annual and Special Meeting of shareholders will be held on December 15th 2016.  

http://web.tmxmoney.com/article.php?newsid=8112457906672798&qm_symbol=RVX

The company hasn't been sitting on its hands in the interim.  They just did a presentation in Cologne at BIO Europe.  Here is a link to the slide presentation from that event:  

http://www.resverlogix.com/upload/media_element/252/01/rvx-bio-europe---november.pdf

Notable in that presentation is yet another mention of a second licensing/development deal to be announced in 2016, the first being the deal in 2015 with Shenzen Hepalink.  When that deal was announced RVX.TO had made a big move and was trading up around $3 CDN after starting 2015 at less than $0.60 cents.  

Which brings me back to the first line of this blog posting, the references to the Christmas present under the tree or an episode of "Let's Make a Deal". 

In the PR of October 6th linked above the company stated that the matters to be considered at the December 15th meeting will be delivered to shareholders and filed on SEDAR no later than November 15th 2016.  I am expecting that information will give at least an indication, (if not the outright reason) as to why the Oct. 5 AGM was cancelled.  

Is it simply the licensing/development deal?  If so is it significant enough to send RVX soaring like it did in early 2015?  Is it perhaps something else more significant?  Could it be something negative?

Back this past August and early September RVX was trading down around $1.20 per share.  After spiking briefly up near $2.50 the PPS has settled in and around $1.80 to $1.90 with occasional gusts up around $2.  So what's in the box?  Did Uncle Resverlogix get us that gaming system all the kids are wanting? Or socks and underwear?   We can take $1.80 or so per share now, or wait to see what's behind the curtain.

I am holding out to see what's behind that curtain.  The phase III BETonMACE trial for diabetes patients has now been enrolled for a full year and the company recently announced that there have been no safety or efficacy issues or concerns.  

The market game is never easy, and that's is as it has to be.  It is my belief that there has been a manipulative foot holding the PPS down.  Yes $1.80 or so is much better than the $1.20 it was at, but I think there is much more upside to come, and that good news on or before November 15th could send the PPS on another ride like it had in early 2015 when the price soared from less than 60 Canadian pennies to up around $3.  The difference now being that if a similar run starts it will be from a substantially higher launching pad.

Good luck.....read the disclaimer at the very bottom.  My views are biased as I am a shareholder.  

Nasal surgeries in the United States poised to explode

Next week many in the medical community are expecting a surge in patients needing dire nasal surgery.  The cause?  The election on Tuesday will have so many voters pinching, squeezing and holding their noses so hard that serious damage can occur to that part of the body known in medical circles as the proboscis.  

While I try to be helpful here with this blog, in this case I don't see a solution.  I grew up in the United States and find most Americans to be warm, caring, inviting...by and large American are wonderful people.  And a lot of them are really smart.  That's why its so perplexing to see that the best my American friends can come up with in their election for President is Donald Trump and Hillary Clinton.  

There are so many men and women in the United States who are caring, principled and intelligent. And this is the choice you're forced to make?  To quote a recent movie title:  'Whiskey Tango Foxtrot'!!!  I do not envy you my American friends.  Hell, the guy pushing the broom at the hotel I stayed at in Virginia Beach this past summer has more appeal than Clinton or Trump.

Good luck America, I'll be watching.  And if anyone can suggest a publicly traded company that will benefit from all the nasal surgery that is sure to follow please send me an email.  You have until Tuesday morning to let me know.  

Vuzix - What happened? Know the risks

I first offered up my opinion on Vuzix on Saturday September 3rd, when the PPS had closed at $8.81 the day before.  I had opened a position on the short side on September 1st just after the opening bell a little north of $9, a position which still remains open.  I revisited Vuzix again on Oct. 10th by which time the PPS had fallen to $8.  In the first post I made note of all the bullish promotion, and in the second I focused in more on the history of dilution.

Now it is November and the PPS has fallen all the way under $6, closing at $5.85 on Friday November 4th 2016.  So why am I writing about Vuzix again?  Is it to pat myself on the back?  Yeah okay, there is an element of that certainly. I'm human and as prone to the sin of pride as anyone. But I also know that success can be fleeting in the markets, VUZI could rally next week and the pumpers will jump all over this pathetic little blog.  And if it makes it all the way back to $9 or even $8....have at her, fill your boots.  

I do in fact expect there to be a rally here and there obviously.  Rarely do stocks go up or down in a straight line.  VUZI didn't go from about $4.50 in May to almost $10 in September of this year without pauses and pullbacks, and it didn't fall from those lofty heights to under $6 without the occasional move upward.

This post is going to be about the risks associated with taking out a long position in VUZI.  There's lots of chatter about this company being an industry leader, either now or in the future, but I put that down to either wishful thinking or brainless pumping.

The single biggest risk in my view is Competition.  This is a very crowded space and Vuzix is a guppy swimming with whales. Other entities competing include electronic giants like: Samsung, Sony, LG, Toshiba, as well as other players like Google, FaceBook and Microsoft.  

When it comes to brand recognition alone most people will recognize all those names.  Vuzix on the other hand?  I bet most people (discounting current and past shareholders) have never heard the name once.  Vuzix is going up against major players with established supply and distribution channels, no need to hit the road with a U-Haul to visit trade shows for the big boys.

And with the way the AR and VR space is integrating with other devices like computers, smartphones and gaming systems, its not hard to see Vuzix operating at a severe handicap, perhaps so severe that its insurmountable.

And then of course there's financing.  There's an old saying, ''build a better mousetrap and the world will beat a path to your door''.  That's certainly true in this space as evidenced by the amount of money raised by a start up called Magic Leap.  Maybe you've seen this eye popping video that company put out:

Magic Leap has reportedly raised $1.4 billion in venture capital from such players as Google, JP Morgan, Alibaba and others.  Here's a Forbes article on the company:

http://www.forbes.com/sites/davidewalt/2016/11/02/inside-magic-leap-the-secretive-4-5-billion-startup-changing-computing-forever/#6c6ff42ee83f

In fairness Vuzix was profiled its own video back in 2014.  Here it is:

I don't know about anyone else, but the whale jumping out of the gym floor, that has ''WoW'' factor written all over it.  The Vuzix bit about the stadium lights going down and a technician using the glasses for GPS and technical assistance, meh.  Like there wouldn't be a maintenance guy at the stadium who could take him there and a cell phone conversation wouldn't be enough to fix the problem if the tech didn't know what to do.

I know Vuzix bulls like to make a big deal about the $25 million Intel invested almost two years ago in exchange for shares.  But $25 million for a company with around $40 Billion on its balance sheet, its almost like me buying a homeless person a cup of coffee.  Besides Vuzix is an Intel customer, and given the way Vuzix burns through capital it was probably a wise investment, companies with $0 money have a hard time paying their bills after all.  

In short (no pun intended, well....maybe a little) I see Vuzix as being just way too small to compete in this space.  The company has a long history of attracting investor attention via promotion and bullish sounding press, but ultimately it has always failed to deliver where it really counts, on the bottom line.  Artificial and Virtual reality products like glasses, this will be a huge market in my opinion, but Vuzix will be a footnote I believe, like Tandy and Commodore 64 in the home computing space.  

An intriguing penny play - KUB.V - Ukranian Oil and Gas (TPNEF OTC)

All three of my regular readers know I'm not big on fundamentals, and that I like to run away from the herd.  Penny stocks are the ultimate in risk/reward plays, suitable only for risk capital with me. That means its money that I can afford to lose.

Of course I still like to win, so I don't just toss money at any old stock just because its trading for a few (or in this case just a couple of) pennies.

A friend of mine suggested I take a look at a few stocks he had on the radar, and after reviewing the metrics I like to look at and consulting the charts it didn't take me long to form a bullish opinion on one of his selections, Cub Energy Inc.  I opened a long position last week, so obviously the opinions I am offering up are biased and should be viewed in that light.

KUB.V has been publicly traded since 2010 and its been as high as 80+ cents CDN back in late 2010 and early in 2011.  As recently as early 2014 it was still trading over 20 cents a share.  Why the big drop?  For those living under a rock you might have heard about a little political unrest with a small parcel of land called the Crimean Peninsula, I think that likely had a lot to do with it.   

Okay okay....so what?

I mean just because it used to be an 80 cent or a 20 cent stock....in the here and now its trading around 2 little Canadian centavos.  What in the Sam Hill (where the hell did that expression come from) makes me think that it has a chance to go back anywhere near those levels?

If you read the posting before this one you will see that I view the markets as being incredibly manipulated, its hardly an uncommon opinion.  And the reason I think KUB.V has the potential to go higher is that I believe its been undergoing accumulation.  In fact I think its been under accumulation since early in 2015.

That's going on two years of course, which is a pretty long time.  Why so long?  Well, with about 311.7 million shares outstanding, if there are smart money players who've been loading up, it takes time.  

Here's the chart.

What sticks out to these old eyes is firstly that big volume spike in early 2015.  I see that as smart money players potentially, (and inadvertently) waving a flag announcing the start of an accumulation phase.

What's important to see in the wake of that big volume surge is whether the stock finds support, which obviously it did around the 2 cent level.  It didn't just find support however, it actually climbed as buyers pushed the PPS up around 5 cents for a time in the summer of 2016 before the PPS fell back to the 2 cent area.

The next thing that sticks out is that second  volume surge in July/August of this year.  I see that as another potential flag signalling that the accumulation phase is almost over and that KUB may be primed to be head back to loftier levels.

Back to 20 cents certainly seems possible to me, and perhaps even all the way back to the 80 cent range.  Only time will tell if I'm right, and if I am right then how high KUB might go.

There are other aspects that go into my analysis of course.  I also look at share count, wanting to know if the company was printing shares and dumping them into the public market.  I already made mention that the number of issued shares is 311.7 million.  Well its been at that level since June of 2013, over three years ago.  Whatever the company has been doing to survive with a 2 cent share price from 2015 forward, they haven't been dumping shares on retail investors.

The other important metric for me is short selling because it gets right to the mechanics of the market, something far more important than fundamentals in my opinion.  You might think there would be no point in shorting a penny stock trading for less than a single dime, but regardless KUB has had its share of short sales over the years.  

Back in February of 2015, at the time of that first large volume spike....short sales went from 0 to 78,000.  And short interest now sits at over 200,000 current up to October 15th 2016.  The only logical reason to short a 2 cent stock in my opinion is to manipulate the PPS.  And it is further my opinion that the most logical reason to do that is to encourage selling and discourage buying.  Some refer to is as "shaking the tree".  

Who would want to encourage selling and discourage buying with a 2 cent stock trading near historical lows?  Perhaps its those looking to accumulate because they know, (and perhaps they have the tools available to effect it) that the PPS will be climbing.  

Fundamentals don't mean much to me, but I know others rely on them heavily.  What could change with Cub Energy's fundamental picture that might entice other investors to pay substantially more in the months and maybe even years ahead?  The calming situation in the Ukraine certainly helps, and a rising price for commodities like Natural Gas would do the trick I believe.  

For those sufficiently intrigued to do further research I will invite you to read this recent article from Bloomberg:  Ukraine Starts Winter With Half-Empty Natural Gas Stores

That's enough for now, if KUB does take off though I'll probably do another post to pat myself on the back, I am something of an attention whore after all :-)  

Do note that for those wanting to buy on the U.S. side the stock trades OTC with the symbol TPNEF..

Good luck

Sunday thoughts on manipulation and about being a true contrarian

Time again for some Sunday musing on those things that daze and amaze, on the games that astound and confound retail investors trying to make sense of the capital markets.  

Manipulation, everyone loves to scream manipulation.  

You see people posting about it all the time on stock message boards and other social media sites devoted to the discussion of the equity markets.  Are the markets manipulated?  In my opinion its a dumb question, of course they are.  

What's interesting is that you never see people posting messages complaining about manipulation when a stock's value is going up.  No, to most people manipulation only comes into play when they think its being employed to work a stock down.  Well, here's a news flash...it works both ways.

There are market forces at work way beyond the scope of retail investors.  Hedge funds with billions of dollars in capital that play both sides, long and short.  And Hedgies have another advantage over Mutual Funds, and that is margin or leverage.  Hedge Funds can and will use leverage, as much as 100%, to increase their fire power.  

When you consider all the tools available to influence the buying and selling decisions of retail investors its pretty easy to understand why the bleacher crowd ends up on the wrong side so often. Going long when the smart play is to go short, and short when the smart money players with their giant tool box go long.

Television, print media, analyst ratings and recommendations, investor news letters, promotional interviews and stock promoters with podcasts and YouTube videos, email blasting chop shops.  

I've posted this old webcast interview of Jim Cramer before, but its something that's worth repeating. 

Cramer basically says that fundamentals are meaningless, and I happen to agree.  When you have Hedge Fund players with hundreds of millions of dollars at their disposal they can create whatever reality they want, and I would argue that the more speculative the company the easier it is to do.

So what is a small little retail investor to do?  Incidentally, I don't care how much money a retail player has to work with, even if its one million or even ten million, we're all small fish swimming in shark infested waters.  Some of us may be little tiny guppies, while others may be big fat tuna fish. But we're all luncheon meat when there are killer whales in the water.

There's only one thing to do in my opinion, and that is to be a contrarian.    

But what is a contrarian anyway?  It seems that everyone these days is a contrarian, or at least they claim to be.  If everyone is a contrarian then the real contrarians would have to be conformists wouldn't they?  So let's define what a true contrarian is.

Basically a contrarian tries to run in the opposite direction of the retail herd.  When all the sheep are bullish and buying the contrarian either stays away and goes short.  When the great unwashed are being told to stay away, that an investment is no good, then the true contrarian looks to go long.

BUT WAIT A MINUTE, NOTHING IS THAT SIMPLE.

When looking to go long it would be disaster to simply throw money indiscriminately at every distressed stock one comes across.  Companies do go bankrupt and stocks do get delisted.  

From where I sit its a question of extremes, and in my view charting or technical analysis is absolutely essential.  I myself will not buy any stock without first consulting the chart.  

So what do I mean when I say its a question of extremes?  That's where charting comes in.  If a company releases negative news, if there are posters to social media sites preaching doom and gloom and doing all they can to counter any bullish argument, then a true contrarian might have something worth risking some money on.  The biggest qualifier is the chart, specifically the price volume movements.  If the retail herd is being told to stay away, but the chart shows evidence of support, that's a time when I will start to do more research.

Sometimes a stock is falling, and yet there is bullish news out and pumpers all over social media imploring investors to "get in on the cheap shares".  I would be careful in that case, while the retail herd is being encouraged to buy, there are obviously others unloading the shares the sheep are getting.  

A contrarian looks for support when the players are being encouraged to sell, or for weakness when the herd is being told to buy.

I don't discriminate between penny stocks and those listed on more senior exchanges, its all the same game as far as I'm concerned.  And stocks don't turn from a buy to a sell in the blink of an eye.  I have a habit of getting out too soon when I see market forces ringing the dinner bell, but that's okay....when I leave money on the table I simply cry into the money I made.

Good luck and happy Sunday everyone

RMHB - Climbing the stairs - Higher highs and higher lows

This will be my last post about Rocky Mountain High Brands, a fully reporting OTC penny stock engaged in the production of Hemp Infused energy drinks and High Alkaline spring water.  I've done two previous posts on RMHB starting when the stock was trading at just over .03 cents, it closed this past Friday at .0548

There are some people who contend that when it comes to penny stocks, that charts are useless. I do not share that view.  Charts are simply a reflection of buy side demand and sell side pressure, nothing more and nothing less.  Charts simply reflect the trading and are not prejudiced for or against any stock based on price, industry or exchange.

And RMHB's chart is looking very bullish.

After bouncing in and around 3 cents for the better part of 3 months the stock started making strides on October 11th after announcing its graduation from the non reporting gray pink sheet market, to the fully reporting OTCQB.  That news seemed to act as a catalyst that pushed the PPS up to .05 cents on October 12th with volumes getting up around 10 million. 

The stock then pulled back as volumes cooled off and the PPS drifted lower over the next 5 or 6 sessions, settling in an around .035 cents.  This is significant because it established a new and higher base of support.  

The next move up started on October 20th when news of a distribution agreement was released. That was the start of a 5 day run that saw volumes soar back over 10 million with the PPS hitting .07 cents interday on the 26th.  Then, as before, volumes trading dropped back to less than 10 million over the next 2 trading days with the PPS settling at its current level around 5.5 cents.  Again, this is significant because it establishes yet again another higher base of support.

Those looking to time an entry into RMHB, I would suggest watching to see if support is established in and around the area of 4.5 to 5.5 cents.  On the first run up from 3 to 5 cents investors had 4 days where the stock based around 3.5 cents before the climb to 7 cents.  If the same pattern plays out again there would be another 3 or 4 days in the 4.5 to 5.5 cent area.

This is a chart pattern that you'll hear discussed frequently, its a bullish technical pattern where the PPS climbs to new and higher highs and then settles back to new and higher bases of support. Some will refer to it as  "climbing the stairs".

The wild card with RMHB seems to be news.  Those perhaps watching and waiting to enter could find themselves on the sidelines when news comes out.  And if the pattern continues and volumes go back to 10+ million trading over several days, that's when greed can take over and get people chasing. Those who buy in just as a surge cools off are then left to wait in hope and expectation of another price/volume surge.

Those who jumped in on the first spike to 5 cents, some I am sure bailed out when the stock pulled back to the 3.5 cent area, and then they watched it climb to 7.  The stock market is never easy, and sometimes its not a question of timing, but rather of "time in".  Even the most experienced market player can get caught buying in on a spike and then watching an investment turn from positive to negative.  

That's why I think its vital to play within one's tolerance for risk.  When people play with money they can't afford to lose they tend to act more on emotion than on rational thinking.  If you're overall "big picture" analysis of a stock is accurate, then it can just be a matter of patience.

Given the low price I don't think volume of even 20 million is that significant, and I am confident in my opinion that this stock will see volumes hitting 50 to 100 million on a daily basis before this year closes out. 

Good luck all, and again comments are always welcome so long as they are written in a respectful tone and are absent any profanity.