My introduction to charting and technical analysis, way back in the 1990s came from a book my father gave me by Joseph Granville.  The title of this weighty tome was 'Daily Stock Market Timing for Maximum Profit' and the author described the market game as incredibly complex, with so many indications to follow that it made accurate forcasting incredibly difficult.  

Granville explained that no system could ever be devised that would work 100% all the time for the simple reason that the market machine is (by design) made to take money from the 'dumb money' retail crowd and transfer it to the smart money industry players.  He postulated that if a reliable method of timing the market based on technical indications were ever created, that the market (in order to defend itself and its purpose) would have to....basically break it.  

He tried none the less and his newsletter became widely popular, he was considered by many to be a guru with his Granville Report.  It all came crashing down on him in the 1980s when he became known as a super bear, predicting an impending collapse of the broader markets akin to what had happened at the end of the 1920s.  President Reagan came along and famously exhorted Wall Street to engage in a massive buy back program...the result was that Granville's status as a guru was pretty much destroyed.  Although I think he pretty much predicted his own demise because his forecasts and predictions became too good and too popular.  

Alright....so what would Granville say about Resverlogix?  Probably nothing, its too obscure a company.  But here are two ideas that have stuck with me over the years.

- Charts are most reliable when there's an absense of news, hype and promotion.

We've all see stocks explode higher on great sounding news, valuations go insane as talking heads tout investments to their followers.  Buyers though need sellers and this is where the smart money industry players can transfer ownership of stocks by selling high to willing investors willing to buy high....convinced that the stocks they're buying will climb even higher.  

At times like this charts can look incredibly bullish, but take away all the bullish forward looking news, promotion and talking heads recommending buying and what would the charts look like?  

-OBV short for On Balance Volume can serve as an indicator if a stock is being accumulated by smart money players.

When it comes to Resverlogix I'm of the opinion that smart money accumulation started taking place in earnest after the Assure trial "failure".   Sellers abounded and flooded the market back in June/July of 2013 when Phase II Top Line results missed the mark.  But just as smart money sellers need buyers willing to pay high prices, they also need sellers willing to let go cheap when stocks are low.  The chart formation back at that time is what convinced me to risk money here back in early 2014.  

Back then RVX.TO tanked all the way to something like 20 cents, but not for long....buying quickly brought RVX.TO back up from that abysmal low and it found support in and around the 75 cent level.  Six months past the Black Swan trial results told me that it wasn't simply a dead cat bounce...the support looked real.

From back in the summer of 2013 right up to the current trading I haven't perceived what I consider to be broad based selling or "distribution".  There have been small scale sell offs on spikes, but nothing approaching a level I consider something of a benchmark, that benchmark being 10% of the outstanding shares.  In today's terms that would mean daily volume of in and around 20 million for at least a few trading sessions.

Now getting back to the chart, and back to Granville's ideas.

Joesph suggested looking for stocks with good liquidity for charting purposes, before everyone had computers and could simply point and click to draw one.  He then created a technical measure that is about as easy as you can imagine called On Balance Volume or OBV for short.  All you do is count the volume on a day when a stock moves higher as + and on a day the PPS drops as -, then simply chart it to create a line over time.  

I do believe it was a more reliable technical indicator back in the 60s, 70s 80s and even early 90s....before discount brokers opened up self directed investing to the masses.  Now I think the degree of manipulation in the market is much greater than it was back then....I do think manipulation ruled the day back then as well, but now I think its more intense and more complicated.

One thing Granville said though was that OBV could not be viewed in isolation, it had to be measured against the broader fundamental picture, both of the overall market and for the individual company being tracked.  Stocks that are climbing higher and higher on heavy volume will show OBV climbing but it might not be the smart money accumulating.  If there are lots of news stories out, and promoters hyping, talking heads talking....that can be a signal that the smart money crowd is cashing in, turning their shares into cold hard cash by dumping it on excited dumb money and news focused sheep.

Resverlogix obviously doesn't fall into this category, not even close in my opinion.  The company hasn't even put out a presser in over a month, not since December 18th's news about the 8th DSMB recommendation.  And volume is pathetic, forget 10% of the almost 200 million outstanding shares....with today's volume of 24.6 thousand we're talking less than 1/10th of one single percent.

All my instincts are telling me that Resverlogix is nearing the end of a long (5+ years long) period of accumulation....the reason I believe the volumes are so low is because for the most part everythign that could be shaken free has already been shaken free.  Another bear raid like happened back in April when short interest spiked up to something like 1.6 million could happen again I suppose....but the fact that it hasn't has me thinking that nobody is willing to take that risk, not with BETonMACE so close to the finish line.

I don't mean to diminish the risks here....as BDZ and others sagely point out, regardless of how good things might seem, success is not a slam dunk....science is science and instincts and beliefs aren't proof.  

Here's the 6 month chart, I prefer stockcharts.com but I can't imbed anything from that site so I'll use tmx.com....

You see almost a 6 month base line support area of in and around the $3 mark....on ever decreasing volumes.  Granville's OBV line is up sharply from the start of this 6 month period to now.  MACD is tight and just above the zero line...flat indicating neither bullish nor bearish.  And stochastics are down toward oversold territory and pointing bullishly up in the very near term.  

I'll wrap up this long winded post with some thoughts about what might be coming....just as a possibility I think news of a European licesnsing deal could vault the PPS.  I'm not talking about a deal like the one in Israel, I mean something that actually results in some substantial upfront cash.  

News like that or something similar and I think we could start to see RVX start trading at prices closer to those analyst targets we've seen of $5 to $10 that we've seen from Zacks and others.  If that does happen I intend to loosen my grip on some shares....I still think even $10 could prove to be an incredibly low price, but its a zero sum game which means you can't have your shares and the money they're worth as well....you have to choose, money or shares.  

We'll see if something happens, and then if it does...we'll see what the trading looks like.

Cheers...I had an early appt this morning and then took a nap in the afternoon, hence my late night musings.  Now that this is down maybe I can fall asleep.