On a rainy evening in Germany, with perhaps too much time on my hands, I thought I would take the time to give those of you who might be interested, a summary of where I think EDE currently stands and some insights into my personal investment philosophy, a philosophy that has held me in good stead over the last 40 years.
My investment philosophy is to combine the technical (micro and macro) with the fundamental picture (micro and macro). I believe that when all these four conditions are positive this ensures that each investment that I make has a good chance of success. With regard to EDE, all these four boxes are currently ticked.
IMHO one cannot rely entirely on fundamental analysis these days. This is primarily due to the fact that ca. 70% of all investors rely on technical analysis (TA) to make their buying or selling decisions. This increasingly technically based investor behaviour has led to a herd mentality which is of course precisely the reason why stocks are experiencing more and more volatility. Therefore TA is something that no investor can afford to ignore. This obsession with TA unfortunately has its disadvantages i.e. it can ultimately mean that even the best company fundamentals may still not be good enough to move its SP upwards if the company’s technical picture (micro) or indeed the overall market’s technical picture or fundamentals (macro) are poor.
At the current moment EDE is slowly recovering from the disappointment of last week’s news concerning the delay in the Class A/Class 1 field test. Although having said this, it is still far from certain whether there actually will be a delay or not. IMHO the Class A/Class 1 field test will take place and indeed be done and dusted before the end of 2017 and not, as reported in the quarterly, in 2018.
What makes me even more bullish on EdenCrete are the following things:
Current very positive response by engineers both inside the GDOT and outside
GDOT Class B specs are due to be signed off on fairly soon (IMHO at the latest at the end of September)
The likelyhood that the MARTA will reorder within the next 1-2 months
There are currently at least 9 companies currently testing EdenCrete with results probably due this quarter and orders likely to follow.
There are trials of EdenCrete currently being undertaken for Precast Concrete applications with results due in 1-2 months.
As you can see from the above I expect further milestones to be achieved in this current quarter (July-September). Therefore on the fundamental side (micro) I remain very bullish. On the macro front, I also remain bullish due to the fact that for the next 3-5 years interest rates around the world should continue to remain at or near record lows. It is precisely during this time span that I expect EdenCrete to flourish.
Even though the micro and macro fundamentals for EDE are terrific it is imperative to have a bullish chart pattern, both micro and macro, to support this. I believe that EDE’s current chart pattern (micro) is starting to become more and more bullish by the day. The reasons for this are as follows: since this years high at around 34.5 cents there have been 2 sell offs i.e. the “placement” sell off and “Class A/Class 1 field test delay” sell off. In both cases the EDE SP fell below 20 cents. However, in both cases the SP recovered and rallied over the very psychologically important 20 cent level where it currently resides.
I am a 100% believer that “round“ numbers are the most important part of TA. All round the world on a daily basis “round“ numbers are offering support or providing resistance levels for stocks, commodities, indexes, fx, bonds etc. etc.. These “round“ numbers have thus become almost the entire focus of my TA. In EDE’s case these “round“ numbers (support/resistance levels) will be at 10 cent intervals i.e. 20, 30, 40 etc. There are of course other levels that will be significant, some more than others, however, IMHO these 10 cent intervals will play a dominant part over the next 6-12 months.
I therefore I see the following things happening to the EDE SP over the remainder of this year and on into 2017: the 25 cent level is an important price or level for the simple fact that it is a quarter of a dollar. Once this level is breached the next test will be the 30 cent level. Should this level be breached a test of this years high at .345 will be the next important resistance. After this level is breached 40 cents will be the next hurdle. After this there will be significant resistance at 50 cents (half a dollar). Once this significant level is breached it will be on to 60 and 70 cents before once again we have a major hurdle at 75 cents (three quarters of a dollar). After this the 80 and 90 cent levels are the next targets (should be reached around the middle of 2017 IMHO). Once the 90 cent level is breached there will be major resistance as the SP hits the 1 dollar wall. At all these levels both the fundamentals of EDE (micro) but also the overall global stock market fundamentals (macro) will play major roles. If for example there is good news about EdenCrete that is only somewhat mediocre or something that was half expected this may not be enough to provide the necessary impetus to push the SP through a significant level. Such a failure at a significant level could be interpreted as a failure by the chartists and thus lead to a significant sell off. The aforementioned levels are thus no longer resistance but rather support levels.
Summarising, IMHO due to EDE’s current bullish fundamentals and its increasingly good technical indicators, I see the SP primed for a rally. However, this will only happen on very good news. Until this news is received the SP will remain in a holding pattern or trading range of 20 to 25 cents and on fairly mediocre volume. Once this very good news is received, which believe will be in this quarter, there will be an immediate increase in volume and attacks made on the 25, 30 and possibly 34.5 cent levels. How successful these attacks will be will depend entirely on how good the news is.
Finally, every significant rally is always the result of great fundamentals and positive technical indicators. If both line up at the same time this is a sure guarantee of a higher SP.
I hope the above is of interest to some of you and is not too long winded.
The above is my own personal opinion and is not intended as investment advice in any way shape or form. Please DYOR.
Cheers!
MB
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