11-29-09 - Predictable Penny Trading Patterns Makes Advanced Medical Institute, Inc. (AVMD.OB) Perfect

New post today at the http://theperfectstock.blogspot.com. The market has firmly positioned itself above DOW 10000 and many of the large cap stocks have seen significant gains since the first part of 2009. However, many have recently begun to level off. It kind of makes you wonder if all the opportunities for substantial gains in the market have come and gone. Well, in my opinion there are still quite a few stocks that are cheap, profitable, but have yet to recover with the market. I believe most are hidden in the OTC Markets. Sparked by its recently released 10-Q, Advanced Medical Institute, Inc. (AVMD.OB) is the next perfect stock.

Advanced Medical Institute is a service provider, which arranges for patients with sexual dysfunction and prostate problems in Australia, New Zealand and the United Kingdom to be provided with medical services, pharmaceuticals and associated clinical support services.


AVMD.OB got beaten down as did most stocks during past year and half. However, on 11-23-09, the company released their 10-Q detailing the results of their most recent quarter. See below for a few highlights (click here for the full 10-Q):

- 53.5 Mil shares outstanding
- $14.5 Mil revenues
- $0.8 Mil net income
- $0.02 EPS
- $20.1 Mil stockholder equity
- $0.38/share book value
- Company is optimistic about business and profits going forward

The market took note of how undervalued the company became and responded by appreciating the share price up to 600%.


See below for a 2 month chart of AVMD.OB:

From the chart, you can see the large spike that occurred from the release of the 10-Q. Now, an amateur would take one look at this chart and say to themselves, "Why in the world would anybody want to buy a stock that has just had a 600% percent gain particularly after the stock price has dropped the following two days?" A more experience technician would look at the same chart and believe the current setup is extremely bullish. They would see that the stock has spiked on very high volume and quickly retraced exactly 50% on relatively low volume. Also, the experienced trader would see that each of the trading days following the spike have printed higher intra-day lows. Trading in this manner signals that the selling is being exhausted and that the stock is entering into a consolidation phase. Many traders will recognize this and will begin to take positions in the stock. I don't have an accurate total for the float of AVMD.OB, but it has to be pretty thin if the share price was able to jump from $0.04/share to $0.23/share on 2.6 million shares of trading volume. Eventually, the buying pressure will become too great and share price will jump again. In stocks with tight floats the consolidation phase can be very quick.

Different Movie, Same Ending?

I've stated before that stocks often follow market psychology. As traders see success in one stock, they look for other stocks that are similar that will hopefully mirror the results. Viking Systems (VKNG.OB) is a recent market darling that moved from sub-penny to over $1.00/share in less than 3 weeks. The recipe for Viking's success:

- Significantly beaten down OTC stock
- Positive quarterly report sparked the rise
- 40-50 million shares outstanding
- Low float
- Optimistic about company's prospects going forward

Of course there are differences between AVMD.OB and VKNG.OB, but as you can see, many of the underlying themes are the same. Also, it had the same super spike to the upper 20 cent range and a 50% retrace before moving higher. InstaCare Corp (ISCR.OB) is another stock following a similar path that in my opinion is a stage ahead of AVMD.OB. Again, it has the same recipe as others. It too had the same 50% retrace, has already consolidated in the upper teens, and is in the process of breaking out to even higher levels (click here for chart of ISCR.OB). Advanced Medical Institute looks poise to do the exact same thing.


The stock market is generally unpredictable and penny stocks tend to be the most unstable variety of them all. However, certain setups can yield predictable results. In my opinion AVMD.OB has set itself up perfectly to climb higher than its current share price of $0.18 based upon some proven technical indicators. I'm not going to take a leap and say that the stock will reach the dollar level of VKNG.OB, but I think odds of the share price reaching at least $0.30 - $0.40 before Christmas are pretty favorable. Although penny stocks don't necessarily follow the general market, the annual "Santa Rally" that frequently occurs during the month of December won't hurt the company's immediate prospects either. Advanced Medical Institute (AVMD.OB) is the next perfect stock.

New Feature: The Perfect Chart - AMLM.OB (11-04-09)

Click here for the A.H. Belo (AHC) post

While my last perfect stock pick A.H. Belo (AHC) continues to do pretty well (up about 40% since I posted about 3 weeks ago), I've decided to add a new feature to the blog called "The Perfect Chart". Finding the perfect stock is an extremely difficult task, due to the strict criteria I place on my selections. So, I figured in the meantime I'd periodically spotlight a company that might not necessarily be a "perfect stock", but had a "perfect chart". A perfect chart in my opinion is one where there is visually a distinct trend upwards. I'll leave it to you and your own due diligence to determine whether or not it is still a buy, but I felt that it would be neat to point out stocks that the market has obviously fallen in love with. Also, we all know that a trend can be "your friend", so at a minimum these should be stocks that you may want to track.

The Perfect Chart: American Lithium Minerals, Inc. (AMLM.OB)

American Lithium Minerals, Inc. is a U.S. resource exploration company with specific interests in acquiring properties containing lithium. Basically, this stock is a play on the probable boom in lithium usage due to the government's push for electric cars. AMLM.OB is said to own 100% of the mineral rights to one of the largest lithium rich properties in the US.

This stock has one of the steadiest up trends I've ever seen. It is particularly impressive due to the fact that it is a penny stock that trades on the OTCBB. The sudden spike and drop that occurred about two weeks ago acted as nothing more than "noise" in what has been one of the best and most consistent stocks in the entire market the last 3 months. Will it continue?

I find a lot of these hidden gem stocks using a lot of the tools conveyed in my latest on post at my other blog http://yourtradingtips.blogspot.com . Check it out when you get a chance.