APDN Channel Trading & Correction/ Recovery Long Opportunity
Here we see the clear channels APDN traded in prior to and during the bull run until late October when the bear case article was released. I speculate that the bearish price action immediately preceding the article where it dipped into the upper bull channel, that a drop from the peak bull channel was imminent. The article was aptly timed for it's short attack.
Had the article not been published, the price would have likely still traded deep into the Upper bull channel, potentially even dropping through the Bull channel, testing the support on the topside of the lower bull channel. If it had dropped through the lower bull channel it likely would have reversed before entering the higher Value channel.
Also, looking at the past price performance on the 11mil offering earlier in the year, I surmise in the world where the bear article was not published, and the massive drop had not occurred, the new offering would have had far less of a downside impact. As new longs who were in on a bounce play were more skittish than the long term holders evacuated the stock immediately learning of a secondary offering. Had the offering happened while in any one of the bull channels, the dip on the offering would have likely pushed it down to the lower bull channel support, or worst case retreated to the higher value channel before recovering.
Given the increased volume and price action on the rise and fall prior to the bear case article, as well as the volume immediately prior to and following the most recent secondary, I tend to think the players left holding will be rewarded with significant upside on a correction back towards the Bull channel.
As the offering was priced about 3.50, and the cupping on the chart in recent days, the resumption of trading within the value channel would appear to be imminent. With the apparent solid annual report on the verge of being released, upside potential with some corrective action puts the Higher Value channel on deck. Any positive PR affecting fundamentals prior to earnings could also put the ticker right back into $4 range or a 25% upside. On the downside there is a clear long term support at the bottom of the Lower value channel, set your stops there, 2.75 to play it safe potentially 10% downside.
Had the article not been published, the price would have likely still traded deep into the Upper bull channel, potentially even dropping through the Bull channel, testing the support on the topside of the lower bull channel. If it had dropped through the lower bull channel it likely would have reversed before entering the higher Value channel.
Also, looking at the past price performance on the 11mil offering earlier in the year, I surmise in the world where the bear article was not published, and the massive drop had not occurred, the new offering would have had far less of a downside impact. As new longs who were in on a bounce play were more skittish than the long term holders evacuated the stock immediately learning of a secondary offering. Had the offering happened while in any one of the bull channels, the dip on the offering would have likely pushed it down to the lower bull channel support, or worst case retreated to the higher value channel before recovering.
Given the increased volume and price action on the rise and fall prior to the bear case article, as well as the volume immediately prior to and following the most recent secondary, I tend to think the players left holding will be rewarded with significant upside on a correction back towards the Bull channel.
As the offering was priced about 3.50, and the cupping on the chart in recent days, the resumption of trading within the value channel would appear to be imminent. With the apparent solid annual report on the verge of being released, upside potential with some corrective action puts the Higher Value channel on deck. Any positive PR affecting fundamentals prior to earnings could also put the ticker right back into $4 range or a 25% upside. On the downside there is a clear long term support at the bottom of the Lower value channel, set your stops there, 2.75 to play it safe potentially 10% downside.