When is it Time to Buy Digital Ally?
Digital Ally is a company involved in the defense sector or the civilian defense industry. It is a small-cap growth stock dependent on municipal or federal government spending. The financials are lack-luster. Short-term trade opportunities are very profitable but few and far inbetween.
Typically companies like Digital Ally will experience strong short-term spikes up in price from event catalysts like mass shootings, protests or rioting, border crisis, attacks on the capital, an increase in crime statistics, big changes in gun laws, etcetera. Market moving events like this usually lead to some sort of municipal or federal spending towards the defense industry. I remember the "defund the police movement" which caused some damage to the share prices of DGLY. This is an example of such a catalyst event.
The long-term trend is down for this company and many small-cap companies like DGLY in the same industry. The bear market rallies in Digital Ally are massive in relative terms and there is a lot of profit to be made. But in the long-term picture, DGLY is not a good hold at the moment in my opinion. Most of the revenue from companies like this will come from government spending. So the consumer market for companies like this is limited in a sense. So long-term prospects for these companies' prices to go to the moon are limited without a major catalyst. That being said, the short-term swings up in price are very profitable after an event catalyst occurs like mentioned above.
The revenue streams for Digital Ally have been slightly improving over the past two years, but this is an anomaly when you examine the total lifespan of their income statements. The company's operating cash flows are consistently negative year over year. There really needs to be some consistent improvements in the financials of DGLY for several quarters before this small-cap civilian defense company can be considered for a long-term investment. This is all my opinion, but one very important fact that I should mention is that small-cap growth companies like this perform much better in a low interest rate environment. So if the Fed hikes rates longer and higher than currently expected then this could be bad for DGLY.
The shorters have almost completely left the building. In the chart above you can see how over the long-term for Digital Ally the short interest has gradually fallen and is near a point of exhaustion. This makes sense because the price of this ticker has fallen for much longer than a year. With very low short interest you cannot expect a short squeeze any time in the near future. The low short interest can be good for a stock's share price but notice the short-term changes in short interest. Every time there is a short term spike up in price the short interest spikes up accordingly. The shorters are still there but not in masses like in the past. This could be a possible sign of room for some upside in the future but I am not betting on anything just yet because, remember, the long-term picture so far is bearish. Don't fight the trend.
For the short-term swing trader you can be more confident in strong upside movement when there is less upside resistance. You can see in the chart below that most of the bag holders in this ticker are concentrated below the 62 cent level. This is not surprising as the previous low on DGLY's chart is just at the .62 price point. It appears that investors in this name began selling the bags they were holding after the drop below this support. Now the majority of the resistance levels DGLY needs to climb above before there can be clear upside range from the 25 cent to 62 cent price points. Based on the position cost distribution, if there is momentum to the upside then, in theory, the price of DGLY would have a clear runway to the upside once the price passes above the .62 price. Remember that the short-term spikes in price don't last very long so taking profit on the way up with this name is suggested until the long-term downtrend flips upwards.
So when is it time to buy?
I do not have much faith in DGLY. Digital Ally is a strong buy after an event catalyst like mentioned above. There is a lot of profit to be made from short-term swing trading during these events. But the long-term technicals and fundamentals do not look up to par for me to even consider putting it in my retirement account.
Also take note that this company is not heavily invested by institutions like hedge funds or investment banks. It is not in any ETF. Vanguard and Blackrock are the only major institutions holding a small piece of this ticker. But they own at least a small piece of just about every other equity in the stock market it seems so there is no need to take note of this. It appears that the smart money wants to stay away from this stock. So I will do it too.
The only reason I would buy into this name is if there is a major market moving event catalyst like I mentioned above. Other than that I would be cautious putting too much capital into this name. You always see growth companies like DGLY shoot to the moon only to drop back down even further. So be careful with this ticker symbol and don't believe any of the hype you hear in this name.
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Trade the trends via technical, fundamental, and macro analysis. Day Trades, swing trades, and long-term investments.
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mita23 : sold I'll buy it outright
SpyderCall OP mita23 : not yet. Still needs time. You definitely shouldn't buy options in this name. There is no options liquidity yet. maybe more options traders will jump in when this thing starts up-trending. right now it is just a long term downtrend at the moment
STD0313 : So why take the time to poop all over the ticker.....? Based on short interest? Are you a DGLY bag holder?
SpyderCall OP STD0313 : Nope. I don't touch this one unless its a swing trade from an event catalyst like the article stated. I didn't think I was pooping so much. I was just interpreting the data.
I have seen lot of traders talking about this one so I had to put a legitimate opinion out there so people don't lose money.
all you ever hear about these low priced stocks like this is hype or conjecture derived from anecdotal or false evidence.
Im just putting the data out there so people can make an informed decision and possibly keep people from getting caught buying at the high of a pump and dump.
Just watch that 62 cent level. if you are holding a bag then that is the level to watch like the article stated
solo invest mita23 : Don't buy it yet. The long term downtrend tells it all. The shorters are almost gone which is good. But they keep shorting more on every spike up in price. Until the downtrend shows a reversal then only swing trade this one. And right now is not a good time to buy it seems.
solo invest mita23 : Just wait for a major catalyst like another school shooting, or some protest or riots or something. Then you can swing trade it for a few days to a few weeks
solo invest STD0313 : The short interest is probably the best aspect of the analysis. The short sellers have almost left the building. When all of the shorts are gone then there is less people trying to keep this stocks price down.
SpyderCall OP solo invest : exactly
STD0313 SpyderCall OP : Oh didn't know it held a deep interest, thought it was just random pooping. Was thinking why not break down something people could make money on. Instead of one shorts don't even want to touch....[Laugh][Laugh][Laugh][Laugh]
SpyderCall OP STD0313 : right. ill put more out there about my bullish swing plays. if you have seen any of my post from a couple months ago you would see that im bullish on gold, the yen, and bearish on the dollar. its been like that for a couple months. Lots of profit as i called these plays on day one almost.
Ill post more bullish plays on single stocks for those that don't trade options
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