ACIA, a new look

[Pascal]

ACIA was a leading stock early in 2016, to fail after the secondary offering and the end of lock-up period proved overwhelmingly negative.

We now see that ACIA is around a $60 support level. What is a support level? It is a place where past buyers share a common memory of attractive prices. Indeed, $60 was just the place from which ACIA launched its run to $120.

The problem is that August 2016 buyers are gone since a long time. Hence, this support level does not carry much memory among actual investors.



Indeed, the shares turnover is very fast at 27 days. This tells us that only shareholders down to December are of importance here. These shareholders unfortunately on average have bought at a higher price and are statistically inclined to selling if ever the price falls further down.



The question is why are large players buying here? In fact, we do not know. I suspect that an investment guru has started posting a strong support level indication and that followers have started buying. The level of this buying strength is still weak though at 44.7. We would need a buying level at 80 or more. At this point, I believe that we see speculation/anticipation. Why can I say that? Because this is the first time that we see large players buying while the price does not move. This does not point to "insider knowledge," but more to very traditional support/resistance buying.



Now, to be fair, we can see below that in the past 115 days, buying deep into the envelope has led to good returns (especially in August 2016). Unfortunately, this places the entry price at $58, which is below the support level and the Supply analysis tells us that more selling would take place there.



The sensitivity analysis however also tells us that it is possible to buy at around $60 with a 2.5% stop level.



Conclusions:

I believe that this trade all depends on the general market breaking to a new high. If this is the case, then the most shorted stocks will attract shorts covering. ACIA has a high short ratio and could be prone to a shorts covering rush.

At this point, we need either more days for the stock to "churn" around $60 or we need a huge buying wave to push the price to $68 and eliminate the "loss cutting" selling pressure.