Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Breakdown or Rebound?

Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Breakdown or Rebound?

Elite Pharmaceuticals Inc (OTCMKTS:ELTP) Breakdown or Rebound?

This stock is definitely oversold, the short volume is picking up, yesterday shorts were 3m of the 8m traded, that ratio has been rising over the past few days.

The stock made a similar move late last year and recovered, that is an encouraging sign for shareholders. Shorting of the stock is a major concern in the mid term.

Personally I like the addiction treatment space, addiction is America’s biggest disease, at these prices we are looking at buying some ELTP, we are already Invested in other addiction products like TLIF, the future of this space is huge.

The FDA has rejected Elite Pharmaceuticals’ application for SequestOx over persistent safety concerns, that’s not the end of the world, the company can work with the FDA and reach a solution.

HEFFX Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 24 white candles and 24 black candles.

A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold (which appears to be the case with ELITE PHARMA) to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.

A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend (which appears to be the case with ELITE PHARMA) it is called a bullish hammer.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

ELITE PHARMA closed down -0.010 at 0.147. Volume was 395% above average (trending) and Bollinger Bands were 417% wider than normal.

Open High Low Close Volume___
0.153 0.155 0.110 0.147 8,328,151

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 0.22 0.31 0.32
Volatility: 163 133 98
Volume: 6,371,627 2,394,070 1,728,918

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

ELITE PHARMA is currently 54.6% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of ELTP.PK (mildly bearish). Our trend forecasting oscillators are currently bearish on ELTP.PK and have had this outlook for the last 7 periods. Our momentum oscillator is currently indicating that ELTP.PK is currently in an oversold condition.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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