This High Risk / High Reward Stock Just Broke Out with Historic High Volume

We recently started a series called “Penny Stock of the Day”. These ideas are geared towards 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: Bluejay Diagnostics Inc. (NASDAQ: BJDX)

Today’s penny stock pick is the diagnostic company, Bluejay Diagnostics Inc. (NASDAQ: BJDX).

Bluejay Diagnostics Inc. develops and markets patient products for triage, diagnosis, and monitoring of disease progression in the United States. It is developing Symphony platform, a technology platform comprising Symphony Fluorescence Immuno-analyzer that orchestrates blood processing, biomarker isolation, and immunoassay preparation using non-contact centrifugal force; and Symphony Cartridge Library, which includes reagents and components.

The company also offers ALLEREYE diagnostic test, a POC device for the diagnosis of allergic conjunctivitis. In addition, it develops biomarkers for the detection of other diseases such as hsTNT/I for myocardial injury and NT-proBNP for cardiac heart failure. It has a license and supply agreement with Toray Industries, Inc. for making and distributing the protein detection chips.

Website:  https://bluejaydx.com

Latest 10-k report:  https://sec.report/Document/0001213900-22-011417

Analyst Consensus: As per TipRanks Analytics, based on 1 Wall Street analyst offering 12-month price targets for BJDX in the last 3 months, the stock has an average price target of $8.00, which is nearly 391% upside from current levels.

Source: TipRanks.com

Analysts | Source: TipRanks.com

Potential Catalysts / Reasons for the Hype:

  • The company announced that the FDA has agreed to consider Bluejay’s plan to pursue a De Novo submission for the Symphony IL-6 Test.
  • Corporate Insiders Bought Shares Worth $162.2K in the Last 3 Months.

    Insiders | Source: TipRanks.com

On analyzing the company’s stock charts, there seem to be multiple bullish indications…

Bullish Indications

#1 Symmetrical Triangle Pattern Breakout: The daily chart shows that the stock has currently broken out a symmetrical triangle pattern with historic high volume, which is marked as purple color lines. A symmetrical triangle pattern represents a period of consolidation before the price breaks out. This is typically formed when there is indecision in the price movements and uncertainty among the buyers and sellers. Once a breakout from the upper trend line occurs, it usually signifies the start of a new bullish trend.

BJDX – Daily Chart

#2 Bullish ADX and DI: The ADX indicator shows bullishness as the +DI line is above the -DI line, and the ADX line is currently moving higher from below the +DI and -DI lines.

#3 Price above MA: The stock is currently above its 50-day SMA, indicating that the bulls have currently gained control.

#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 Breakout From Consolidation Area: The weekly chart shows that the stock has currently broken out of a consolidation area and is moving higher. This is marked as a pink color rectangle. This is a possible bullish indication.

BJDX – Weekly Chart

#6 Bullish Stoch: The %K line is above the %D line of the stochastic in the weekly chart, indicating possible bullishness.

#7 Bullish RSI: The RSI is moving higher from oversold levels, 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 BJDX is above the price of $1.75.

Target Prices: Our first target is $2.30. If it closes above that level, the second target price is $3.20.

Stop Loss: To limit risk, place a stop loss at $1.45. Note that the stop loss is on a closing basis.

Our target potential upside is 31% to 83%.

For a risk of $0.30, our first target reward is $0.55, and the second target reward is $1.45. 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:

  1. The company has a history of net losses. BJDX incurred net losses of approximately $3.5 million, and $1.2 million for the years ended December 31, 2021, and 2020, respectively.

    BJDX – Consolidated Statements of Operations

  2. The company has not yet launched any products and the ability to do so will depend on the acceptance of BJDX’s Symphony platform in the healthcare market.
  3. Despite being a loss-making company, the executives are being paid significant compensation.

    BJDX – 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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