- You can see the last few steps of it on this chart, but if you look even further back on the chart, you see a clear series of fractals where every marijuana season, KGKG has a big run. However, unlike many scammy MJOTCs, KGKG does not do a full retrace. As the marijuana OTC market cools off, it declines, but it does not make new lows or even hit old lows. It's a stairstep up of 5 steps up, 2 steps back. This indicates the quality and staying power of a real company with delicious products that is working hard to grow. Folks that do deep due-diligence are willing to hold onto the stock, not drop it at the first signs of a peak.
- The last run from trough to peak was about 500%. We're only at 60% into our current run and the old all-time-highs are only 230% from trough.
- On the year-long timeframe, we are breaking upward out of a massive , a classic TA pattern that is one of the more reliable patterns. And the bigger the pattern, the bigger the implied gain.
- We consolidated in a formation above the breakout, a continuation pattern.
- We broke down out of the . Now according to classical , this is not good. However, I've noticed these fakeouts more and more, especially on low liquidity markets. Big players--whales--sell a ton of stock to break the price down out of the pattern instead of up out of the pattern. They do this to try to trigger stop-losses and access "liquidity pools" where people are willing to sell their shares because they're scared of further downside risk, thus they have a stop loss in place. This allows them to scoop a large amount of cheap shares before taking the price back up. This is actually a very good sign because it means whales are invested and will do the heavy lifting to take the prices higher so they can profit. The second excellent sign was that the whales failed in scooping liquidity down in the stop loss region below the pattern. Notice the bars on the days we went down there: very low. This is a second good sign because it means the shares are mostly locked up in strong hands. We don't have a bunch of retail investors panicking and selling at the slightest provocation. Having a float locked up in strong hands is essential for a strong bull run.
- KGKG for a long time has had a high-quality product, but they did not have very good sales/revenue because Amazon was one of their primary distribution channels. Shipping drinks is expensive and not very attractive. They were slowly adding retail distribution partners, but they really needed to do more. Being a quality company, they did more. On Sep. 7th they hired Chris Sellinger an experienced beverage salesman who took his previous employer's annual sales from 70k cases sold to 1.1m cases sold in 36 months! He has already made a big impact with KGKG announcing on Friday (Sep. 28) that they've signed a deal with a beverage distributor in NC/SC with 1100 clients.
- They also announced and quoted their CEO as saying, "The Company has met all OTC requirements in order to uplist to the OTCQB, with the audit of our 2017 financials being the last piece. We continue to work with our accounting firm and are nearing the tail end of the audit. This piece is extremely time consuming and I thank our shareholders for being patient during this process. Our goal was to have the audit completed in Q3, but with the development of new products, the hiring of our V.P. of Sales, and focusing on Company growth, this has been pushed to be completed in Q4."
- These twin announcements caused a huge spike and a 20% price spike on Friday which burst back up through the and revealed the fakeout. I make no predictions about how the continuation and multi-day run will continue, but I do expect it to continue, eventually at least, with a strong run through Oct, Nov, and Dec.
- I've marked areas on the chart, though if we get a run like I'm expecting/hoping for, some of those resistance points won't put up much of a fight. We shall see.
Full disclosure: KGKG is my largest position, so I am very biased, obviously. But that does cut both ways, because this wouldn't be my largest position unless I believed in this company. This is not financial advice.