I don't see a trend reversal in the chart. GUMM broke above what had been resistance at about 20 1/2 on January 18 on its way to 36. The low on February 9 was at 21 1/8 and it bounced off 21 3/16 today. It is common for previous resistance to provide support during a consolidation and I don't see anything on the daily chart that concerns me. The weekly and monthly charts are trending up. We had a discussion about technical analysis and GUMM a few months ago and I opined then that the sentiment for this stock has a tendency to change on a dime. It will change again, and I believe that the stock will be back over 30 in a heartbeat.
SSEC and GNLN have been heavy buyers the last two weeks and it is my belief that SSEC is buying for one or more institutional clients. Institutions don't buy frauds or companies that don't have potential. Obviously they don't always have the best timing, but the fact that the institutional sponsorship has increased each of the last five quarters blows the fraud argument out of the water, IMO.
I'm not concerned about the 35% decline from the high because the stock went from 12 to 36 in only about eight weeks for a 200% gain. VPHM declined from a high of 47 to a low of 28 7/8 during a six day period in January. That's a 38.6% decline, and as we know, the stock is near 100 now. Using your logic, a stock that trades over 30% off its high never rallies back. VPHM is only one example, but there are hundreds more like it.
The clinical studies are well overdue and could be released at any time. At some point, I think investors will begin to speculate about the release of the studies and send the stock higher. This may explain why it has been basing and why GNLN and SSEC have been such heavy buyers. It's easier to get filled on a 5,000 share bid when sellers are around. Try to do that once the sentiment changes. In all likelihood you won't get a fill and they'll move the bid away from you.
Gum Tech is a growth company and is a lousy long-term short. As I have said before, one can make money shorting it for short periods of time, but the longer you hold a short, the more likely that you will lose money. This has been proven true several times over the last year and I believe that it will be proven true over the next year. I understand the fundamentals of this company very well and have confidence in where they are going. I'm not intimidated by short sellers and can only say that if you stay short, I believe that you will eventually lose money. When the stock starts up, some of the ~1.2 million short position will become buyers and propel the stock even higher. You'd have to be nuts to be on the wrong side of this stock given the thin volume and likelihood of good news coming out that could cause most of the selling to dry up. |
