New to the HLX story, have been keeping an eye on the region off the back of CLQ and more recently CLL. After reviewing today's announcement and a look at the technical setup, have decided to deal on market.
Interesting to see a level of stock get dumped into this announcement, looks as though a few stale bulls were waiting for some volume to exit their position. Largest volume through HLX since early 2016. After talking with a few brokers about this story, I understand that the recent placement went to a very small few sticky holders. I think the fact that the placement was done at a 0% discount to the market at the time should give you a good signal that those who came on board weren't looking for a good deal re entry price, they wanted the exposure and were happy to pay the market price at the time. That doesn't happen often at all.
HLX seems to have some very good optionality in the region to take advantage of the Cobalt / Ni theme that has traction in the current market. I also like the copper and gold projects to add a little something extra to their portfolio. With a market cap of $14mil, HLX can quite easily play the valuation catch up to the likes of CLL capped at $78mil.
Having a quick look at the technical setup on the daily chart, good to see the downtrend from earlier in the year over, with the stock making higher highs coupled with higher lows. The trend is up! Resistance of the 200 day moving average comes in at 3.8c, which was hit today. I think that once this is taken out, we can expect a swift move to the upside in the short term. Stochastics, MACD and RSI all looking good.
Iam expecting over the next few days for the sell side volume to thin out as those stale holders exit the register.
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The weekly setup is also very encouraging with the sotchastics and MACD both bullish with plenty of room to move to the upside. The RSI is also looking nice, trending higher after touching the 'oversold' region briefly back in July. I like the candlestick action with the price breaking the down trend in September, to then re-test support and as you can see from the most recent candlestick of this week, no breaking out once more. Once 3.8c as per the daily chart is taken out, I expect that 4.1c, which is the 200 week moving average may see a little resistance. However once this is taken out, I would be expecting a move back to the 6c - 8c region once more.
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Exciting times ahead, a lot to be bullish about.
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