Is AVTX a Good Buy Right Now?

Over the past few weeks, we have seen a lot of unusual activity in this ticker symbol. If there is anyone out there who knows why activity has picked up in AVTX, then please enlighten me.

Over the past few years, putting money into this company has been losing bet. Any stock that is in a long-term downtrend is usually something that I would stay away from.

Over the past few weeks, there has been an extremely high amount of relative volume being traded in this name. Personally, I can't find any rhyme reason for this anomaly so far. Perhaps investors are seeing a bottom in price for this biotech company. I'm still skeptical.

To add to the intrigue, a textbook wedge pattern has formed in the near-term charts. The price action is coiled tightly near the tip of this wedge pattern. A breakout or a breakdown is imminent.

A breakout to the upside of this wedge would appear bullish. I might consider going long at this point if I see strong momentum and volume coinside with the breakout.

Like I already mentioned, I usually stay away from a long-term downturned. But these small cap biotech growth companies can have really big intraday swings, so they make for really good day trades occasionally.

I have highlighted the nearest support/resistance levels I will be watching for potential swing trades in the case that we do see a breakout with volume and momentum associated.

There are very few bagholders above the current price. If we can get some momentum to the upside, then, based on the position cost distribution, we should have minimal supply zone resistance to the upside.

The income statements this company releases do not paint the picture of a strong company. Sure, this is a small biotech company, and they could have a breakthrough with future growth potential, but that is just not the case as of right now.

I should mention that a lot of biotech companies look like this. Research and development costs can be massive in the biotechnology industry. But once a company discovers a breakthrough, the profits can be even more massive. Along with FDA acceptance or rejection, this is one of the reasons you commonly see tremendous price fluctuations with companies in this sector.

In an environment of very high interest rates, debt restructuring is sometimes out of the question. If this company can not produce enough income to service the relatively large amount of debt they currently hold, then it could possibly impact the stock price negatively in one way, shape, or form.

On many occasions, I have witnessed share prices plunge when a company tries to raise money to service their debt.

Future projections look bleak as well. Personally, I take analyst predictions with a grain of salt because they can change in a moments notice once investors see a brighter future ahead. But this still doesn't look good for the company.

I am still trying to make sense of this most recent headline. I am assuming somebody wants to buy this company. A part of me tells me the only thing that could potentially save this company is a buy-out at the right price.

I scanned the table of contents in their most recent SEC filing, and aside from the title, it mentioned nothing about mergers or acquisitions. It did, however, mention a reverse split that would be coming to a vote soon. This could possibly save the ticker from being delisted but would give it more room for downside

I would not touch this name for a long-term investment. But as I mentioned, companies like this provide great swing trade opportunities if we see the proper catalyst. Like an FDA headline, patent news, or a new distribution agreement of some sort. So far, I have seen none of these, so any investment I would consider in this name would be a short-term swing trade, most likely a daytrade.

I am strongly considering a short-term trade, like I mentioned earlier, purely based on the technicals in the charts.

As always, I am not a financial professional, and this is not investment advice. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Give your investments time. Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend. Good luck trading.