In a perfect world, stock-picking makes sense. The market sees and understands a company's prospects, and assigns a value to a share in the company, and as those prospects change or clarify, the market gradually changes the value of that company's shares. We don't trade in a perfect world though, which is why Generex Biotechnology Corporation (OTCMKTS:GNBT) is so interesting right now. Shares of GNBT have given the market a bullish 'tell', even though we've not seen a shred of news from the company in months.
The nearby chart of GNBT tells the story. After nearly four months' worth of a low, grinding drift lower, something lit a fire under the stock last Thursday, sending shares up above all of its short-term and intermediate-term moving averages. In fact, Generex Biotechnology shares used the 20-day and 50-day moving average lines as a pushoff point yesterday, and are using the 100-day moving average line as a floor today. The volume hasn't been bad on the way up either.
It's the shape of the chart, however, that's most compelling.
Ever heard the phrase "getting your second wind?" You probably have. It means that you (or a stock, or an athlete, or a horse, or whatever) has recovered from the initial fatigue of starting a task, and is picking up the pace again now that he/she/it has caught his/her/its breath. Yeah, well, GNBT is getting its second wind.
The first wind was the surge last Thursday that pulled the stock out of the gutter and pushed it right up into the key 200-day moving average line (green). It was a great move to be sure, but too much, too fast. As was the case in late January, all it took was a brush with the 200-day average line to put some profit-taking into motion, sending Generex Biotechnology Corporation shares back down again. This time, though, was a little different. This time, those short-term moving average lines acted as support and sparked a rebound pretty quickly. If the bears were going to beat it back down again, they just blew their best chance. Conversely, it's pretty clear the bulls didn't give up, even when they could have easily justified not piling back in.
But what prompted the move in the first place? That's just it - nothing. One could argue is was news that Generex was presenting at this year's ASCO (a biopharma conference), but it's not like the company could possibly tell the market something it didn't already know. Sometimes though, a little PR nudges a stock in just the right way at just the right time. GNBT was ready for the nudge, and now that the ball is rolling, the stock's getting traction. It may not be completely logical, but it's reality. And, if Generex Biotechnology Corporation shares can push past the 200-day moving average line, that's when the fireworks could really begin.
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