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: Qualigen Therapeutics Inc. (NASDAQ: QLGN)
Today’s penny stock pick is the biotechnology company, Qualigen Therapeutics Inc. (NASDAQ: QLGN).
Qualigen, Inc. develops novel therapeutic products for the treatment of cancer and infectious diseases.
It offers FastPack, a rapid diagnostic testing system; ALAN, a DNA coated gold nanoparticle cancer drug candidate that targets various cancers; AS1411 for treating viral-based infectious diseases; RAS-F3, a small-molecule RAS oncogene protein-protein inhibitor that blocks RAS mutations and inhibits tumor formation; and STARS blood cleansing system, a DNA/RNA-based treatment device that removes tumor-produced compounds and viruses from a patient’s blood.
Website: https://www.qualigeninc.com/
Latest 10-k report (2020): https://sec.report/Document/0001493152-20-005503/
Analyst Consensus: According to TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for QLGN in the last 3 months, the stock has a ‘Moderate Buy’ rating.
Source: TipRanks.com
Recent Analyst Ratings | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- The positive response to the research report from Zacks, which noted that QLGN is valued at $9 per share.
- Corporate Insiders buying shares worth $9.8K in the Last 3 months.
QLGN – Insider Transactions
- Qualigen Therapeutics’ strong third-quarter 2021 financial results, with a 38% revenue increase.
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 historic high volume, indicating possible bullishness. The stock is also trading above its 50-day as well as 20-day SMA, indicating that the bulls have currently gained control.
QLGN – Daily Chart
#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and ADX line are above the -DI line, and the ADX line is currently moving 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 Above Support Area: The weekly chart shows that the stock is trading above a support area, which is marked as a pink color dotted line. This is a possible bullish indication.
QLGN – Weekly Chart
#5 Bullish Stoch: In the weekly chart, the %K line of the stochastic is above the %D line, indicating possible bullishness.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for QLGN is above the price of $2.86. Alternatively, you can purchase the shares of QLGN if it corrects to the price of $2.25.
Target Prices: Our target prices are $4.00 and $5.00.
Stop Loss: To limit risk, place a stop loss at $2.15 (for entry near $2.86) and $1.60 (for entry near $2.25). Note that the stop loss is on a closing basis.
Our target potential upside is 39% to 122%.
- Entry near $2.86: For a risk of $0.71, our first target reward is $1.14, and the second target reward is $2.14. This is a nearly 1:2 and 1:3 risk-reward trade.
- Entry near $2.25: For a risk of $0.65, our first target reward is $1.75, and the second target reward is $2.75. This is a nearly 1:3 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Potential Risks / Red Flags:
- The company has not yet filed the annual report for the year ending December 31, 2020.
- QLGN has been a loss-making company and incurred losses since its inception. QLGN’s net losses were $10.1 million for the year ended December 31, 2019. As of December 31, 2019, the company had an accumulated deficit of $80.3 million.
QLGN – Net Loss
- QLGN was formerly known as Ritter Pharmaceuticals, Inc. and formerly traded under the symbol RTTR.
- Despite being a loss-making company, the executives are being paid significant compensation.
QLGN – 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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