The timing was off when we bought this stock back in the fall, as after we bought the price slumped back toward the lows again. What happened was that I had interpreted the pattern forming as a completing cup-and-handle base, but then it morphed into a double bottom. We can see what happened on the two-year chart, and how the pattern still has some attributes of a cup-and-handle base, so that it may be described as a hybrid pattern between that and a double bottom. As it now more closely resembles the latter, that is what we will label it as.
The most striking point to notice on these charts is that, while the Premier Health Group Inc. (PHGI:CSE; PHGRF:OTCQB; 6PH:FSE) stock price has risen significantly from its December lows—so that we have more than made good our loss—the advance has been driven by persistent strong volume that has caused a spectacular ramp-up in the accumulation line, and has also taken the on-balance volume line to new highs. This is an indication that almost all of the volume is upside volume, which is strongly bullish. This also normally implies that a stock is building up to a big move, which means that it should have little trouble overcoming the resistance that has temporarily capped the advance.
Thus, it is interesting to observe the current bunching of the price and its moving averages, which means that any further advance from here will quickly lead to a moving average cross and the 200-day turning up, a development that typically marks the start of a major bull market.
On the nine-month chart we can see recent action in more detail, and how the sharp advance from the middle of December has brought the price up to resistance at the September highs, where it has stalled out, as we would expect. However, the extraordinarily strong volume indicators, especially the accumulation line, imply that it will soon turn higher and storm through this resistance.
Thus it is also interesting to observe that when it tried to drop back further yesterday in the early trade, buyers snapped at it from beneath, driving the price back up to leave a bull hammer on the chart by the close. This action could well mark the end of a tiny correction that will be soon followed by a breakout above the resistance. The next stop on its way up will be the resistance approaching the $0.70 area.
We therefore stay long, and the stock is rated a buy here, and especially on any minor near-term dips.
Premier Health Group website
Premier Health Group Inc. closed at CA$0.49 ($0.32) on 23rd January 20.
Article originally posted at 9:25 a.m. EST on CliveMaund.com on 24th January 2020.
Clive Maund has been president of www.clivemaund.com, a successful resource sector website, since its inception in 2003. He has 30 years' experience in technical analysis and has worked for banks, commodity brokers and stockbrokers in the City of London. He holds a Diploma in Technical Analysis from the UK Society of Technical Analysts.
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Charts provided by the author.
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The above represents the opinion and analysis of Mr Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
