Element Nutritional Sciences (ELMT.CN) is an innovative and research driven Canadian nutraceutical company specializing in the development of science-based products for the global consumer packaged goods market, with a portfolio focused specifically on men and women over the age of 50. Element’s lead product, Rejuvenate, is a proprietary formulation that is clinically proven to assist in the rebuilding, restoration and rejuvenation of natural loss of muscle mass due to aging or other medical conditions.
My last technical look at Element Nutritional was on the first of November. This was the chart at the time:
We were looking for a support bounce at $0.48-$0.50. Ideally with a break above previous lower highs and above my moving averages. That did not happen. Instead we continued to sell off.
Before we look at the current chart, let’s look at some recent fundamental press releases.
Element Nutritional Sciences did report Q3 2021 financial results last week. Here are some highlights:
- Increased revenue to $2.1 million for the year-to-date Q3 2021, an increase of 212%, with a gross margin of $0.2 million
- Recently added distribution partners including Sam’s Club, Longo’s and Fortinos
- Innovation pipeline now includes JAKTRX™ PROMINO, JAKTRX™ Pro Recovery, Rejuvenate™ Immune Health and Rejuvenate™ Omega Health, targeting high potential nutrition markets
- Listed Rejuvenate™ plant-based single serve pouches with the Longo’s grocery chain in Ontario
- Launched Rejuvenate™ plant-based single serve pouches across all 23 Fortinos locations, including its online platform, making Rejuvenate™ is available at over 400 Loblaw Companies locations across Canada, including Shoppers Drug Mart, Loblaw and Fortinos
- Rejuvenate™ ready to drink organic plant protein beverage will be available at all 589 Sam’s Club locations, with shipments beginning November 29, 2021
Speaking about Sam’s Club, Chris Parry covered this news and what it means for Element Nutritional. Here is what he had to say:
The deal follows an initial test run on Sam’s Club’s online portal in July.
Element Nutritional Sciences Inc.’s Rejuvenate ready-to-drink organic plant protein beverage will be available at all 589 Sam’s Club locations, with shipments beginning Nov. 29, 2021. This follows the launch of Rejuvenate on the Sam’s Club e-commerce platform in the United States announced on July 14, 2021. [..] Founded in 1983, Sam’s Club is a wholly owned subsidiary of WalMart in the United States and Puerto Rico, in addition to locations in Brazil, China and Mexico. For the fiscal year ending Jan. 31, 2021, Sam’s Club’s total revenue was $64-billion.
No small feat. Finding a spot on that chain’s roster means many smaller retail chains will be happy to take the product. Amazon reviews show 4 stars out of 5, which bodes well for repeat use.
The Sam’s Club deal means the products can now be found at Loblaws, CVS, Walgreens, Shoppers Drug Mart, Amazon, Food Lion, Fortinos, Metro, and iHerb, among others, which puts it across North America and beyond. A recent Asia Pacific distribution deal promises to open more global markets.
A lot of good news for the company, but it is frustrating to watch the stock drop. Even the retail/meme crowd couldn’t help stop the fall, as Element Nutritional attended and sponsored WallStreetBets “To the Moon” party on November 30th 2021 in Miami, Florida. So right now it is all about finding a bottom.
Not a pretty chart. Trying to buy right now is akin to catching a falling knife. In my experience, the best way to play these major drops is to wait for signs of bottoming. Some sort of range, or reversal pattern. I know what you are thinking. “But Vishal, what about the range for the entire month of November?”. That’s where the technical lesson comes into play.
Honestly, it looked really good. The stock was holding the range, and all we needed was a nice strong close above $0.50 for a trigger. I want to highlight the price action on November 26 2021. Where the stock broke below support and printed new all time record lows at that point. Notice how we climbed back above and closed GREEN. We even saw the MOST shares traded ever for the stock with a volume of 1,236,256. But to no avail. We ended up closing below support and have just kept selling off. To flip bullish from here, we would need to climb and close back across $0.415.
The lesson I want to impart is in regards to the candle on November 26th. Some of you may notice that candlestick. It is known as a hammer candle. You read any book on candlestick charting, and you will find that hammers are bottoming candles. They appear when price is in a downtrend, and bulls ‘hammer’ in a bottom. The hammer candle on Element Nutritional Sciences is textbook. Especially given the long wick.
But here is where things did not line up. These trading books don’t make it too clear that a hammer is not just a one sign to buy trigger. The most important part is the candlestick that prints AFTER and in the coming days. The trigger is actually a green candle closing above the highs of the hammer. You then nestle your stop loss below the hammer lows and ride. That did not occur, and it was the sign I was looking for if you watched our Investor Roundtable on Youtube.
Things looked promising, but we just did not get that close. What would I be looking for now? Let’s see how the psychologically important $0.25 zone will hold. We are just a few cents away from there, and I will be looking for some sort of bottoming pattern to form. Ideally we range for a few days, or print a reversal pattern. Element Nutritional has a good product (although some would say too many competitors) and their products are on the shelves of large household names. Once a bottom does form, it will be an attractive position for an entry.
