We’ve said it once and we’ll say it again, during these uncertain times due to COVID-19, even with the vaccine becoming more readily available to the world, healthcare continues to dominate headlines. With this increased coverage of current events in the realm of health, there are lesser known companies that provide ancillary services to healthcare professionals that have begun reaping the benefits of this media momentum.
There is the old saying that “all press is good press.” While the legitimacy of this saying is up for debate for public figures, as far as micro and small caps trading OTC or on the CSE that tend to not be covered by many analysts, the saying is quite true. A simple headline could be the driving catalyst for sending a stock soaring after being relatively dormant for months. This is what happened with our pick of the day, Reliq Health Technologies Inc. (OTCPK:RQHTF). The company announced on Tuesday that they signed a new contract with a physician practice in Florida to provide iUGO care to over 25 skilled nursing facilities. This opens up a new revenue stream for the company, and traders seemed to agree as shares traded to close up at $0.554/share (+8.73%) following the news. Before discussing the technical setup and trading strategy, first we think it’s important to get a bit of background on the company itself.
Background:
Reliq Health Technologies Inc. specializes in developing Software-as-a-Service (SaaS) solutions for remote patient monitoring, telemedicine, and care collaboration. Reliq's IUGO health technology platform is a hardware and software solution that allows complex patients to receive high-quality care in the home, improving health outcomes, enhancing the quality of life for patients and families and reducing the cost of care delivery. The firm earns through the supply of mobile device management (MDM) solutions for mobile devices and subscriptions of the iUGO CARE platform to healthcare client. The firm is based in Canada.
Reliq Trading Strategy:
The recent bounce off of the 50-day SMA paired with the momentum seen during Tuesday’s session to close over the 10-day SMA lead us to look for entry at Wednesday’s open. Since the stock is far from levels seen from the trailing 52 weeks, the resistance levels are few and far between. In fact, there is only one significant level in our view between current prices and our price target, and that is the February peak of $0.75. After that, it’s blue skies to our price target of $1.00, which is both a round, mental number in addition to being just before the trading range seen years ago, so we think it best to get out before any potential noise.
Because this stock has been uptrending in recent months, the levels of support are robust. Up first is the 50-day SMA that served as support earlier this week. This dynamic level of support is currently at $0.486. Immediately following this level is both the February 2nd gap theory support at $0.437 paired with the trough made earlier this month on March 5th at $0.434. Because it is imperative that this trend stays bullish for this play to work out, anything below these three levels would indicate a potential reversal, so we have set our stop loss at $0.429.
With these risk parameters and using Tuesday’s close of $0.554 as the proxy entry price, this play is shaping up to have +80.51% upside while risking -22.56%. We anticipate this move occurring within the next five to seven months.
