jtorkr

Possible Wykoff accum. after price discovery - NUMI shroomboom

Long
jtorkr Pro Updated   
TSXV:NUMI   None
NUMI could be in the midst of a Wykoff accumulation.

^ means a pro, v means a con.
I am trying to look at both sides to reduce emotionally-blinded decision making.

Looking from far, there is systematic market risk:
v institutions adopting Bitcoin , resulting in broad market exposure to USDT fraud risk and Bitcoin volatility
v GME apes stressing underlying system

A broader market pullback or turn to bear market can affect any stock's price.

Looking at the sector:
^ I believe I know that psychedelics work, and are safe
^ mental health a huge industry that impacts all sectors because..humans, and looks to grow due to COVID
v proper testing can take time and money
v Canadian election can affect the path the sector takes.

I believe the psychedelics market is in the nascent stages of a multi-year bull market. Valuing companies in the sector right now is difficult.

Looking at the company:
^ one of the few companies in the sector that actually has revenue
^ lower risk of `going to zero` because not focused on novel compounds
^ is focused on creating IP
v lower potential to moon because not focused on patenting compounds
v rank-ordered within industry, less focused on making money, more focused on helping people and making help accessible
^ outstanding team and network
^ focused on psychedelic-assisted psychotherapy (similar to shamanic-assisted tripping, which is an ancient, proven methodology)
^ $63.2 million cash position (1/3 current market value @~$0.87
^ YOY revenue is expected to increase by ~100%
v not much attention on reddit (hey, it seems to matter)
^ lower volatility due to lack of meme-retail involvement
v has diluted shares in the past

The company is solid, growing through acquisitions and research, and a leader in the sector.

Numinus is licence by Health Canada to cultivate, extract and sell psychedelic compounds. They also have a dealer's licence to import, export, possess, test and distribute MDMA, psilocybin, psilocin, DMT and mescaline.
v my understanding is that ibogaine is the most effective psychedelic specifically for opioid addiction. but entails cardiac risk, but numinus does not seem to be working with ibogaine-derived compounds

The book: Bear Market Trading Strategies by Matthew R Kratter say that if a stock moves above it's 200 day MA, one can consider shorting. Playing with this logic, NUMI is below it's 200 day MA in what looks to be a possible multi-year bull market, so now might be a good entry point.

On morality and ethics:
Numinus may not have a 1B valuation like MMED (with 0 revenue), but by supporting a company that is focused on natural healing and accessibility it is a step in a direction away from the big pharma method of `extracting value from` towards the team human (podcast) method of `creating value for`. And I believe that is what the mushrooms want :).

How does investing help Numinus Wellness:
A higher stock price allows for things such as uplisting to the TSX and NYSE which gives them more access to capital. Also, investor support allows them to obtain capital at a higher valuation.

Full disclosure:
I bought NUMI at 28c, have sold off portions several time for a variety of reasons, and now am dollar cost averaging in again during sideways movement and am focusing on managing risk.

This is my first chart publish. I will appreciate all feedback, critical or otherwise.

This is not financial advice.
Comment: Wyckoff
Trade active: There are some errors, I will not fix them until I publish a new chart due to the current chart becoming invalidated.

The first error that I noticed is that the left anchor of the black trend line starts at the low of the day after the all time-low, where I intended it to be anchored at the all time low.

The relevance of this is that the dip that happened on Monday actually broke the base trend line (where on the chart, it simply bounced off it). The consequence of this is that it would have flushed many 'sell-low' stop-losses. Hopefully this would have knocked out a large amount of sellers. The bottom of a bear market is by one definition when all the sellers have left the market.

New information has also come to light. Specifically the Evergrande debacle has shown to be a source of systemic risk and market-wide dumping may affect the price with increased downward price-action and volatility.

The initial analysis accounts for systemic market risk, so even though not specifically mentioned, it is accounted for in a general sense and as such I will remain with my trading plan of dollar cost averaging into the stock.

I can imagine a further compounding of systemic risk bringing further selling pressure but as long as I remain bullish on the sector and the company I would view further downside as buying opportunities.

Further downside below Monday's low of .69 could invalidate the Wyckoff accumulation pattern and would call for another chart.

Another error is that I have "failed cup and handle pattern" written where it actually was a successful cup and handle pattern.

The importance of this is that for whatever reason the chart of NUMI does seem to follow technical/pattern analysis over time, giving me more confidence in the validity of technical/pattern analysis when I look at the chart.


I would also like to add the information from this news article:
https://thedalesreport.com/interviews/nu...

^ Peter Nyquvest (PN) drew a connection between lack of analyst coverage to Numinius being `intentional` about who it engages with
^ analysis seems to be difficult because of the company's multi-tiered approach (wellness aspect, pharmaceutical aspect)
v PN reiterated that FDA clinical trials can be expensive
^ PN states that his focus with partnering (through M&A) is companies who are here for `the long game`
^ PN states that he doesn't believe that there is an impending threat to regulatory change from the Canadian election (liberals won, with a minority government)
^ PN states that he believes MDMA will be the next legally available psychedelic
^ PN states that Numinus has the facilities are `ready to go` and a significant number of practitioners are trained, both regarding MDMA opportunities.

I believe that ketamine and LSD were added to Numinus' licencing from Health Canada.

^ Regarding IP protections, PN states:

“I don’t think there’s a place for restrictive medicines in the psychedelic therapy space, especially, if this goes to a decriminalization type of movement, or something more broadly accessible, those patents are out the window. So, for us, it’s more around the drug production side of things… and then really coming down to the therapeutic model.”

which I found very interesting.

^ He goes on to say that he believes that psychedelics "will be primarily administered in a service-based model"
v although a first mover, I can imagine it might be difficult to maintain leadership in a service-based model if a bunch of brands open up with novel concepts and we reach some sort of market saturation situation
^ with NUMI also focusing on production methods, hopefully if new places open up there will be business for Numinus on the supply side

Happy trading and investing to you all! This isn't financial advice.
Trade active: Oh and while on the topic of errors. The chart is all off-center and zoomed in on the last part. I obviously mucked up the posting but if you click and drag the bottom date-line to the right the full chart appears as originally intended with proper alignment of the labels and the arrows. Whoops!
Trade active: ^ Four wicks near this bottom on the daily and we're sitting on my arrow deep in the target along the black trend line.
v Emotionally it feels like this trade is a loser
v unless volume picks up I can imagine this to keep bleeding

This continues to be a buying area for me within this trade.

Quote
"...is pleased to announce the expansion of its psychedelics research facility with an additional lab and application for federal licensing, as it continues to broaden its services to support industry research and production while adding new revenue streams."

from the Yahoo finance article sub-headlined::
^Additional lab facility and federal licence application add expanded contract services to portfolio

Copied from the article:

The new space will be dedicated to the following services:
Bioanalytical testing,
Bioassay and in-vitro studies,
Research & development and formulation studies for several psychedelic compounds, including ketamine and LSD, and,
Small batch manufacturing.

To quote further;
^ "As the psychedelics industry grows, supply of clinical-grade materials and access to qualified research facilities and talent are increasingly becoming bottlenecks."

And finally, a negative perspective:
v Technically in this quote exploitation of the mushrooms for profit is not focused on, which can decrease the speculative valuation: "As industry leaders, we recognize it is essential to leverage our assets to support allied groups in order to achieve our mission of increasing accessibility in mental healthcare."

END: full article: https://finance.yahoo.com/news/numinus-u...

v Bitcoin has become hyperbolic and tether has been fined for what one could see as fraud, in years past. The `only up` printing of Tether since COVID has not been explained and was not included in this investigation, it seems, which I see as increased systemic risk.
v speculative investment capital may further be moved away from traditional markets to cryptocurrencies due to upward thrust of Bitcoin
v Evergrand and the Chinese real estate market continues to bring uncertainty

Trade is still active. This is not financial advice.
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