MSB $1 Party, page-947

A clean break of $1 and then holding that level would be a big occasion. We are getting close, but there is wariness by nervous investor and volumes are dropping away as people wait to see whether others will break the level first. Investing is a bit of a herd mentality and most people like to copy the actions of others - safety in the herd means they don't feel quite so dumb if they make the same mistake as everyone else. If there is a significant break, $1 would then be solid support and the next move up could start.

The good thing at the moment is that small moves below $1 aren't triggering capitulation by investors who might otherwise be giving up on the hopes of a $1 break. Often people will take a level like $1 after a big rise (from 61c on June 30 means it is up 64% each time it hits the buck) and say, "well that's good enough, where are the next lot of buyers coming from, you don't go broke taking a profit". That's not a bad attitude if you are just trading and don't have a long-term view on the value of a stock. I note that the consensus analyst price target (on Nasdaq.com) is $US6.50 for MESO and that equates to $A2.08. Having recently bought at 78c, I could take a short term flip, but there looks to be more upside than downside at the current price. WSJ.com is even higher with an average price target of $US8.20 (converts to $A2.62).

There was always going to be uncertainty and nervousness for investors to throw money at MSB on the first break over $1 without any corroborating announcements or new fundamentals to back it up. People will always be nervous about looking silly or feeling stupid if they get carried away with hype, only to see a price subsequently pull back. That's what happens to most people when they invest. The market exists to steal the maximum amount of money from the maximum number of people. Highs are made because there are large numbers of people desperate to buy in after a big rise - the high can't be set until they are all in and have all bought. There's no mass buying event at present (in fact volumes have been extremely low since October 13) and the price has been well behaved, in a holding pattern a few cents either side of $1, waiting for the next communication by the company. There are several possibilities for a push higher in the near term, but we'll have to wait for one of them to happen. Of course, there is also the potential for disappointment - but as investors we have to guage which is more likely and look at potential upside vs downside.

Meanwhile, the price is also flirting with the 200 day moving average and is currently sitting right on it and the 10 day moving average has just moved up through the 200 day for the first time since Nov 2020 (which heralded a 56% rise over just a few days to $5.05). Moving averages aren't predictive, they just tell you where the share price has been - but these sort of moves can indicate that a bottoming process is over and that a new uptrend is emerging - how fast or strong will be determined by the fundamentals and announcements which follow. All you can say at present is that the selling appears to be exhausted, though strong new buying is yet to emerge. A good announcement after such a long-term bottoming process should drive a solid move forward in the price. A bad announcement might start a new wave of selling - but the last selling wave has been exhausted, as has the buying wave which pushed us from 61c to $1.

Note the 10 to 200 day moving average cross in the graph below (and also that it hasn't happened since 2020):




We are delicately poised, and that's why people are nervous, but I am encouraged by analysts' 12-month price targets and by the encouraging announcements MSB has made to date. Even a 27.3% fall in the S&P500 to the low of last week, rampant global inflation and rising interest rates and 6.7m new shorts in MSB since Aug 24 has failed to dent the MSB share price since the June 30 low. We are having a bit of a breather and consolidation at the moment, but we will have the next quarterly release by MSB in just over a week and that should give the MSB its new direction and will hopefully mean we can put the $1 level behind us.