We are following nano cap Edgewater Wireless Systems (symbol YFI.V) listed on the TSX.V exchange for quite a while now. Full disclosure: we hold a number of shares as well. But as usual, we try to neutralize any emotion or bias by focusing on information that really matters, primarily on the chart(s).
When YFI.V broke out in March, it quickly became a tenbagger, attracting a lot of attention and momentum investors (traders?). It is easy to focus on the uptrend when a stock is in momentum, but the way down is what is much more important, particularly the price level and associated volume trend on the down. From that perspective, looking at the latest trends after the correction, we get very excited about YFI.V.
As seen on the chart, volume was extremely light after the stock peaked in June of this year. So there was plenty of room for the stock to fall further. Yet, it retraced until the April/May consolidation area. Also, the fact that volume was low after June means that most investor did NOT sell their shares, which means they truly believe in the potential of the company! It could also mean that the number of investors largely outpaced the momentum driven traders, which is excellent news.
Since October, we see again an uptrend, both in price AND volume. We consider $0.30 the breakout area, where you should be closely watching behavior of volume.
Our assumption is that the company will surprise with positive news during the annual shareholder meeting on Tuesday December 15th. We are planning to dial in, and will report back to our readers with the important highlights of the call.