We recently started a series called “Penny Stock of the Day”. These ideas are geared for traders with an extremely high risk appetite.
Our Penny Stock of the Day is chosen by screening for stocks under $5 and then applying technical analysis on the shortlisted set of penny stocks showing unusual volume. When making these trades, please make sure to pay vigilant attention to pricing moves and have a strict stop loss in place to avoid significant losses.
Penny Stock of the Day: NXT-ID Inc. (NASDAQ: NXTD)
Today’s penny stock pick is the healthcare technology products and services provider, NXT-ID Inc. (NASDAQ: NXTD).
NXT-ID Inc. develops and markets solutions for payment, Internet of Things (IoT), and healthcare applications with experience in access control, biometric and behavior-metric identity verification, security and privacy, encryption and data protection, payments, miniaturization, and sensor technologies. The company, through its subsidiary, LogicMark LLC, manufactures and distributes non-monitored and monitored personal emergency response systems sold through healthcare durable medical equipment and monitored security dealers/distributors, and the United States Department of Veterans Affairs. It serves various end markets, including the security, healthcare, financial technology, and the IoT markets.
Website: www.nxt-id.com
Latest 10-k report: https://sec.report/Document/0001213900-21-021782/
Analyst Consensus: Not covered by analysts
Potential Catalysts / Reasons for the Hype:
- The news of approval of two reverse stock split proposals relating to NXT-ID’s common stock and Series C preferred stock, allowing the company to stay on Nasdaq.
- The news of the company being awarded a general services administrations contract, typically considered difficult to get.
- Rumors that the company owns bitcoins.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Falling Wedge Pattern Breakout: The daily chart shows that the stock was forming a falling wedge pattern for the past several weeks. These are marked as purple color lines. It has typically taken support at the bottom of the wedge before bouncing back. The stock has currently broken out of the falling wedge pattern with high volume, indicating possible bullishness.
Daily Chart – NXTD
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line is above the -DI line, and the ADX line has started to move higher from below the +DI and -DI lines.
#3 MACD above Signal Line: In the daily chart, the MACD (light blue color) is currently above the MACD signal line (orange color). This indicates a possible bullish setup.
#4 Bullish Stoch: The %K line of the stochastic is above the %D line in the daily chart and is also moving up from oversold levels, indicating bullishness.
#5 Above Support Area: The weekly chart shows that the stock is trading above a strong support area, which is marked as a pink color dotted line. This is a possible bullish indication.
Weekly Chart – NXTD
#6 Bullish Stoch: In the weekly chart as well, the %K line of the stochastic is above the %D line and is currently near oversold levels. This indicates a possible bullish setup.
#7 Bullish RSI: The RSI is currently moving higher after reaching oversold levels, indicating the strength of the current upmove.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for NXTD is above the price of around $0.47.
Target Prices: Our target prices are $0.90 and $1.50.
Stop Loss: To limit risk, place a stop loss at $0.27. Note that the stop loss is on a closing basis.
Our target potential upside is 92% to 219%.
For a risk of $0.20, our first target reward is $0.43, and the second target reward is $1.03. This is a nearly 1:2 and 1:5 risk-reward trade.
In other words, this trade offers 2x to 5x more potential upside than downside.
Potential Risks / Red Flags:
- The company has a history of net losses. NXTD had reported an operating loss of $586,078 and a net loss from operations of $2,864,984 for the year ended December 31, 2020.
NXTD – Consolidated Statement of Operations
- NXTD has an ongoing lawsuit, Orlando v. Nxt-ID, Inc. No. 20-cv-1604 (S.D.N.Y.). The Complaint alleges that the Company has breached certain contractual obligations under a merger agreement, dated May 23, 2017, between Fit Pay, Inc. and the Company, regarding certain future, contingent earnout payments allegedly that could be owed to the Fit Pay Shareholders from future revenues.
- On May 24, 2019, NXTD had received written notice from the staff of the Listing Qualifications Department of The Nasdaq Stock Market LLC indicating non-compliance with Nasdaq Listing Rule 5550(a)(2) because the closing bid price of the company’s Common Stock had closed below $1.00 per share for the previous 30 consecutive business days.
- Despite being a loss-making company, the company executives are drawing good compensation.
NXTD – Executive Compensation
As you can see, today’s featured penny stock offers big upside potential… but it also comes with a number of risks and red flags. As always, when dealing with penny stocks, we advise caution before entering into such high-risk ventures. Remember to think before you trade… understand the risks… and if you decide to trade, stick to your stop-losses!
Happy Trading!
— Trades of the Day Research Team
READ BEFORE TRADING PENNY STOCKS: The allure of penny stocks lies in their potential to deliver massive gains in a short period of time. However, in exchange for that opportunity, most penny stocks carry tremendous risk. They can be extremely volatile and are susceptible to “pump and dump” schemes and fraud.
Unlike regular stocks, the financial condition of most penny stock companies can be extremely difficult to analyze, as the majority of such stocks are traded on over-the-counter (OTC) exchanges, which are typically less transparent and less regulated than the major exchanges. In fact, in the penny stock space, it’s often easier to spot warning signs and red flags than it is to identify a sound investment. Nevertheless, we do our best to identify short-term trade opportunities in this exciting space because we know some of our readers are looking for high-risk, high-reward ideas. We just urge you to make sure you fully understand the risks before making any of these trades.
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