Pinned straw:
Those who follow me here and also follow $PNV will know that I am NOT a technical investor.
However, I am always eager to learn, and so today plotted the chart below within my CommSec Ap. using the Bollinger band technicals views, which plots the Simple Moving Average (in this case 20-day) with the +/- 2 standard deviations. The basic idea being that when it flies above the upper limit, the stock is overbought and when is flies below, it is oversold. (I have no idea what other technical alogithms say ... @Saiton ... momentum traders are probably offloading?)
So, in this year's version of the $PNV rollercoaster, we've breached the lower Bollinger bound for the first time in over a year.
The other thing I'd note is that the volumes have been modest for a while now, in part because the shorts have quietened down quite a bit on this stock.
Let's overlay newsflow on that:
- 8th May - Record Month
- 23rd July - FY Trading Update (a good news story)
- 16th August - FY Presentation (confirm in the details of the good news story)
- 4th September - Pivotal Trial Complete (quite a good news story)
- 18th Sept and 2 Oct - Director Selling (not good news)
- Number of days since material good news: c. 95
Make no mistake, $PNV is still a highly-valued company, based on the fundamentals, and riding the rollercoaster is a condition of being a shareholder. But I think this is primed well for the next update.
So What?
I don't buy or sell on technicals, I only do that on valuation. And my current valuation is $2.60 ($2.30-$3.50). My problem is, that $PNV is already my largest RL holding. But it has fallen so far below my lower limit of valuation that it sure is tempting to take a small bite, particularly given that I am well within my maximum single stock exposure on a cost-base basis.
Decisions, decisions.
Disc: Held in RL and SM
@mikebrisy while I don't use any fancy technicals, I do like to use the 3-point trend lines and just look at the chart to see if it is telling me anything about sediment and I don't buy if there is negative sediment. I try to follow the logic of the QAV podcast reference the 3-point trend line (but on a shorter time frame normally), Cameron has a good Youtube video explaining it from memory. I bought Polynovo around $1.50 originally knowing it is likely to move more than 50% in a given year and potentially something I could take advantage of by trimming or adding at the right time so bit of a mix of investor/trader mindset. I have trimmed back IRL (note that PNV is a small position for me) at around $2.50.
Right now, I'm sitting on my hands and seeing how this plays out looking to add at some point in the future well below $2. The PNV chart below to me has some strong negative sentiment. The higher blue line in the chart was the slow climb gradual climb. Around the $2.25 mark there was support which now looks to be clearly broken now. I just added a new yellow line. Based on my personal rules I wouldn't buy until at least there is some positive looking sediment and that would require the yellow line to be crossed at a minimum. I apply these rules to my buying because in the past I use to love falling knives. If I liked it at $2.50 why would I not like it now? Well I have learnt the answer is because the market doesn't like it and might offer it to me at $1.80 in 3 months' time as an example... Also, in that time I might find out what I was missing and not be interested anyways....
Are you a betting man, @mikebrisy ? At this point in the cycle (asking whether to buy tomorrow/Friday), thats really what it comes down to.
You know my thoughts on the product (positive, but not magic, probably no moat). Even at this discounted price, the PE is high. If growth disappoints, it's getting creamed (which may itself represent a buying opportunity, depending on medium term projections).
I'm asking myself the same Q, although off a small ~2.5% holding. Buy more as a gamble/hedge against good news, or wait and see? My gut says do nothing, which means you should probably buy lol
