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: Alzamend Neuro Inc. (NASDAQ: ALZN)
Today’s penny stock pick is the preclinical stage biopharmaceutical company, Alzamend Neuro Inc. (NASDAQ: ALZN).
Alzamend Neuro Inc. focuses on developing products for the treatment of neurodegenerative diseases and psychiatric disorders. The company’s lead product candidate is AL001 for the treatment of Alzheimer’s and other neurodegenerative diseases and psychiatric disorders. It is also developing AL002, a cell-based therapeutic vaccine, which seeks to restore the ability of the patient’s immunological system to Alzheimer’s.
Website: https://alzamend.com
Latest 10-k report: https://sec.report/Document/0001214659-21-007963/
Analyst Consensus: Based on 2 Wall Street analysts offering 12-month price targets for ALZN in the last 3 months, the stock has an average price target of $11.50 and an average rating of ‘Moderate Buy’.
Source: TipRanks.com
Recent Analyst Rating | Source: TipRanks.com
Potential Catalysts / Reasons for the Hype:
- ALZN’s upcoming clinical data release for its experimental Alzheimer’s treatment. The company had announced that it will release the topline data for its Phase 1 clinical trial for AL001 for dementia related to Alzheimer’s by “mid- to late- December 2021.”
- Recent insider buying. Corporate Insiders had bought Shares Worth $469.4K in the Last 3 Months. A filing with the U.S. Securities and Exchange Commission showed that Ault now owns 42.3% of Alzamend Neuro’s outstanding shares.
Insiders | Source: TipRanks.com
Insiders | Source: TipRanks.com
- The heightened social chatter, with mentions of the company on Twitter and other social media sites. This appears to have boosted trading volumes in Alzamend’s stock.
On analyzing the company’s stock charts, there seem to be multiple bullish indications…
Bullish Indications
#1 Double Bottom Pattern: The daily chart shows that the stock is currently forming a double bottom pattern. This is shown in pink color. A double bottom pattern is a strong bullish pattern and a breakout from it would indicate that the stock could surge higher. The stock currently looks poised for a breakout, indicating bullishness.
ALZN – Daily Chart
#2 Price Above MA: The stock is currently trading above its 50-day SMA, indicating that the bulls are gaining control.
#3 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line and the ADX lines are above the -DI line, and the ADX line has currently started moving higher from below the +DI and -DI lines.
#4 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.
#5 Bullish Stoch: The %K line is above the %D line of the stochastic in the daily chart, indicating possible bullishness.
#6 Downtrend Broken: The weekly chart shows that the stock has broken out of the prevailing downtrend. The downtrend line is marked in purple color. This is a possible bullish sign.
ALZN – Weekly Chart
#7 Bullish Stoch: The weekly chart also shows that the %K line (blue color) is currently above the %D line (orange color). This is a possible bullish setup.
Recommended Trade (based on the charts)
Buy Levels: If you want to get in on this trade, the ideal buy level for ALZN is above the price of $3.40.
Target Prices: Our first target is $4.50. If it closes above that level, the second target price is $6.00.
Stop Loss: To limit risk, place a stop loss at $2.70. Note that the stop loss is on a closing basis.
Our target potential upside is 32% to 76%.
For a risk of $0.70, our first target reward is $1.10, and the second target reward is $2.60. This is a nearly 1:2 and 1:4 risk-reward trade.
In other words, this trade offers 2x to 4x more potential upside than downside.
Potential Risks / Red Flags:
- ALZN has been a loss-making company.
ALZN – Net Loss
- The company has just two full-time employees.
- ALZN has ongoing legal proceedings. The company, as well as Henry Nisser, Executive Vice President, General Counsel and a director, and Milton C. Ault III, Founder and Chairman Emeritus, were named as defendants in a suit filed in Supreme Court, New York County on June 3, 2021, titled Dominion Capital LLC v. Nisser, Index No. 155395/2021.
- ALZN is at a preclinical stage of development and currently has no source of near-term revenue. The company has no products approved for commercial sale to date.
- The company was incorporated in February 2016. It has limited operating history upon which to base an evaluation of the company’s business and prospects.
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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