Last week, we wrote on article on Data Deposit Box (CSE: DDB) and identified why it had a high likelihood of being a pump and dump stock. We went over the exact moment it broke out and volume came flooding in, the sudden social media attention, and the fact it had no material change. That article, can be found in detail here: “BRIEF: 3 Signs that Data Deposit Box is Likely a Pump Job“.
So why are we discussing a stock again only a week later? Well, because we caught a bit of flak for it. We addressed the potential for a news leak, and investors and traders alike grabbed hold of this acknowledgement. Fair game. There’s been a bit of a development on the stock as well since our latest article. Alas, we give you this.
Data Deposit Box: A Traders Paradise
The new development at Data Deposit Box
So, what was the new development? Well, last week we acknowledged that no material change had occurred for the company. Evidently, the company wanted us to put our foot in our mouth, but only slightly. As a result of the action the equity has seen, management made an offering to current warrant holders, of which there are currently 23,775,594. All of these warrants have an exercise price of $0.07, with one of two expiries: December 28, 2018, or March 15, 2018.
So, whats the significance of this? Basically, assuming all warrants are exercised it’ll add a further 23.78 million to the companies fully diluted share count. This of course, is in addition to the 23.78 million new shares add to the outstanding count. However, in the process this adds up to $1.66 million to company coffers immediately.
How do traders benefit from this? Short form: hype. As of the companies latest financials issued on November 20, Data Deposit Box had approximately $393,606 in current assets. If you add in the potential $1.66 million should all warrants be exercised, and the company will have approximately $2,000,000 to spend. Based on rumours of the entrance to the blockchain sector, this is more than enough to get the engines revving for DDB. It also provides the company with easy access to future cash, through the additional warrants issued at $0.25 a piece.
Keep in mind that this will likely provide some selling pressure at the same time as warrant holders sell their positions that they just established. Some will undoubtedly hold, while others exit immediately. For traders, it’ll likely cause some dips. Be aware of the gap that is currently present at $0.10 to $0.11. If selling pressure comes in strong from warrants being exercised, this gap will want to fill.
Data Deposit Box’s insane volume as of late
To keep it short and sweet, since December 19, the volume on Data Deposit Box has been nuts. We’re well aware that this is a result of traders coming in to flip a few pennies for a good percentage return. However, that’s exactly why its a paradise for traders. This high degree of liquidity is exactly what is needed for traders, it provides the quick in and out that they crave.
Above, you will see the breakdown of volume that Data Deposit Box has seen in approximately the last month. In our earlier article, we weren’t lying when we said the volume came out of nowhere. Of the sixteen most recent trading sessions, six of those days saw absolutely zero volume. However, over the last eight trading sessions the average daily volume has been roughly 15.1 million.
One thing traders and investors alike need to keep in mind, is the net house positions. As can be seen above, Anonymous has been a major seller of the equity. In total, they’ve disposed of over seven million shares. It’s not retail traders that use anonymous to remove a position, its institutions or significant shareholders. Definitely something investors need to be aware of.
Next in the line is TD Securities, which has disposed of a net 3.7 million shares over the time frame. Although much more retail trades through this desk, there clearly has been position offloading occurring during this time as well. Retail investors don’t typically provide this much selling pressure when a stock is moving up.
The charts for Data Deposit Box have classic patterns
Lastly, is a glance at the charts. For traders, it really couldn’t be any easier. On the hourly chart, a classic ascending triangle has formed which broke bullish in the last hour of the day yesterday. Most commonly, this signals continuation to the upside. There is a good probability that the stock will test $0.20 and $0.21 shortly. This however is our opinion, and should not be construed as investment advice.
This is our favourite chart pattern, as it is quite predictable. After either coming down from a recent run up, or during a run up, the stock will start to consolidate a bit. It will then back test prior support and resistance levels a couple of times, before gaining the strength needed to carry on further. This can be seen by the back test to $0.125, and then $0.145 on Data Deposit Box. It then gained the strength to break through $0.16, and will likely carry some momentum with it.
The daily chart for Data Deposit Box isn’t quite as pretty as the hourly, however it suffices. A symmetrical triangle has formed on the chart, which commonly signals continuation. In this case, it would most likely signal continuation to the upside. The next candle will likely confirm this. Traders do need to be aware of the gap that exists on the daily chart, from $0.10 to $0.11 as we previously addressed.
By now, you’re likely all sorts of confused on why we wrote this article. We know, we aren’t typically supportive of trading rather than investing. We certainly advocate for the latter rather than the former. However, we aren’t naive in knowing that many individuals actually do both. Some hold a core position, while others have separate accounts for their varied investing styles. And sometimes, an opportunity just presents itself.
We are by no means providing investment advice, the charts displayed were opinion only. Lets make that clear. The other information presented however, is not opinion. Its just cold hard data. Use it as you wish. Best of luck to those trading the security, and best of luck to those investing. As long as your making money, it doesn’t really matter what your path to it is. With any luck, one of the many rumors will be true for that of Data Deposit Box and it’ll pay off dearly for both investment styles.
Use the investment strategy that works best for you. There’s always more to know to the trade, or to the investment. Whatever you do, always Dive Deep!
Information for this analysis was found via The CSE, SEDAR, Questrade, Quotestream, and Data Deposit Box. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.