Before placing bets on a rising tide in the stock market, one must first determine where the price floor or bottom actually exists. Today we’ll focus on psychedelic stocks that made bottoms in Q3, and what that means going forward. We’ll also eschew moving averages on the charts today for visual clarity of horizontal price levels.
Psychedelic Sector ETF
Spotlight previously covered AdvisorShares Psychedelic ETF (NYSEARCA: PSIL) in a primer for the sector’s exchange traded funds and their utility in amplifying gains while mitigating risk:
PSIL is the only one which is actively managed. … This allows them to invest [large] sums into smaller companies they believe have greater opportunity [and] quickly rebalance their ETF in response to changing variables. PSIL is a pure-play psychedelic medicines ETF, with [all 28 constituents] being a psychedelic [stocks]. They have $5.9 million under management.”
Actively managed PSIL confirmed a bottom of approximately $2.50/share, which first occurred in Q2 2022 (mid May), once during Q3. Since October began, PSIL has pulled back from $3.25 with a downward trajectory to test its support level again.
A successful defense of $2.50 will further signal the strength of the bottom. The more PSIL solidifies its bottom, the more inviting for money to flow back into the psychedelic space. Why? Consistent price support at a horizontal level is a measure of certainty, and there’s nothing markets and market actors appreciate more than a touch of certainty in an otherwise irrationally exuberant arena.
Now we’ll explore the individual stocks forming confirmed bottoms in the sector during Q3.
ATAI Life Sciences (Nasdaq: ATAI)
Cathy Wood’s ARKG ETF is consistently buying ATAI, but she’s got that Reverse Midas Touch of late. ATAI is one of two psychedelic stocks being acquired in 2022 by ARKG
ATAI confirmed a bottom of approximately $3.12/share, which first occurred in Q2 2022 (mid May and mid June), once again during the end of Q3. Since October, ATAI successfully tested its support level already. Furthermore, ATAI announced positive initial results for Phase 1 Trial of KUR-101, an oral formulation of mitragynine, before markets opened this morning.
Despite today’s market catalyst, it’s next line of resistance at $3.29 is still weighing on ATAI’s price action. Another successful defense of the $3.12 level will further signal strength of the bottom, evidenced by persistent demand refusing to let the supply side breach the dam, which can propel the price action back above $3.29. On the other hand, a sustained breach can potentially drag ATAI down to about $2.95.
COMPASS Pathways (Nasdaq: CMPS)
CMPS confirmed a bottom of approximately $10.50/share, which first occurred in Q1 2022 (March), twice during Q3. Since October, CMPS successfully tested its support level already. Furthermore, Cathie Wood’s ARKG ETF bought over 205K shares of CMPS yesterday in a $2.7M+ transaction.
Moreover, before trading opened this morning, CMPS announced their Phase 3 Pivotal Program Design For COMP360 Psilocybin in treatment resistant depression.
Despite yesterday’s major market catalyst, CMPS is once again retesting that $10.50 support line. A successful defense of that level will further signal strength of the bottom, evidenced by persistent demand refusing to let the supply side breach the dam. On the other hand, a sustained breach can potentially drag CMPS down to about $9, $7.53, and then $6.54.
Cybin (NYSE: CYBN)
CYBN confirmed a bottom of approximately $0.50/share, which first occurred in Q2 2022 (mid May), three times during Q3. Since October, CYBN successfully tested its support level already & rallied to flip $0.58 from old resistance back to new support.
The successful defense of CYBN’s $0.50 level and ensuing bounce further confirms the strength of its bottom, evidenced by persistent demand refusing to let the supply side sustain a breach of the support line. On the other hand, a sustained breach can potentially drag CYBN down to about $0.39.
GH Research (Nasdaq: GHRS)
GHRS confirmed a bottom of approximately $10.96/share, which first occurred in Q2 2022 (late May), at least four times during Q3. Since October, GHRS pulled back from $13/share to retest its support level of $10.96 already.
A successful defense of $10.96 will further signal strength of the bottom, evidenced by persistent demand refusing to let the supply side breach the dam. On the other hand, a sustained breach can potentially drag GHRS down to about $10, $9.30, and then $8.72.
Mindset Pharma (OTC: MSSTF, CNSX: MSET)
MSSTF confirmed a bottom of approximately $0.25/share, which first occurred in Q2 2022 (mid May), at least four times during Q3. Since October, MSSTF pulled back from its late September bounce and is still trading well above its support level.
Multiple successful defenses of the $0.25 level signal the strength of the bottom, evidenced by persistent demand refusing to let the supply side breach the dam. On the other hand, a sustained breach can potentially drag MSSTF down to about $0.23, if not lower.
Numis Wellness (OTC NUMIF, TSE: NUMI)
NUMIF confirmed a bottom of approximately $0.175/share, which first occurred as a significant level of price consolidation all the way back in late 2020. This year $0.175 first emerged as price support twice in July of Q2 (early April) and once again at the end of Q3. Since October, NUMIF pulled back from its late September rally, retested $0.175, and bounced higher.
Multiple successful defenses of the $0.17.5 level signal the strength of the bottom, evidenced by persistent demand refusing to let the supply side breach the dam. But despite NUMIF’s recent bounce off of $0.175, the next line of resistance at $0.21 is still weighing on NUMIF’s price action.
NUMIF’s recent, successful defense of the $0.175 level will further signal strength of the bottom, evidenced by persistent demand refusing to let the supply side breach the dam, which can propel the price action back above $0.21.
On the other hand, a sustained breach can potentially drag NUMIF down to about $0.165, $0.145, and $.09.
Revive Therapeutics (OTC: RVVTF, CNSX: RVV)
RVVTF confirmed a bottom of approximately $0.12/share, which first occurred as a significant level of price consolidation all the way back in June 2018. This year $0.12 first emerged as price support in Q1 (early April) and once again at the end of Q3. Since October, RVVTF successfully tested its support level already, bouncing above another critical price level of $0.16.
A successful defense of $0.16 will further signal strength of the bottom, evidenced by persistent demand refusing to let the supply side get close to breaching $0.12. On the other hand, a sustained breach can potentially drag RVVTF down to about $0.067, then $0.0173.
TRYP Therapeutics (OTC: TRYPF, CNSX:TRYP)
TRYPF confirmed a bottom of approximately $0.09/share, which first occurred in Q1 2021 (early April), twice during Q3. Since October, TRYPF successfully tested its support level already.
A successful defense of that level will further signal strength of the bottom, evidenced by persistent demand refusing to let the supply side breach the dam. On the other hand, a sustained breach can potentially drag TRYPF down to about $0.06, and then $0.0465.
Red Light Holland (OTC: TRUFF, CNSX: TRIP)
TRUFF confirmed a bottom of approximately $0.06/share, which first occurred in Q2 2022 (mid May), during Q3 in the entire month of July and then again at the end of September. Since October, TRUFF successfully tested its support level and propelled the stock past its next resistance level of $0.075.
A successful defense of either $.075 or $0.06 will further signal strength of the bottom, evidenced by persistent demand refusing to let the supply side breach the dam. On the other hand, a sustained breach can potentially drag TRUFF down to about $0.0467.
Craig D. Schlesinger is a professional gambler and market analyst with over twenty years experience predicting price movements and trend reversals in various economic sectors. Over the last two years, Craig established himself as a top trusted authority on psychedelic equities. Follow his technical analysis on Twitter: @mathovermyth.
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Craig holds no positions in ARKG, PSIL, ATAI, CMPS, CYBN, GHRS, MSSTF, NUMIF, RVVTF, TRUFF, or TRYPF
*For purposes of this article, all percentages are approximated and rounded to the nearest percentage point from market data provided by Google Finance at approximately 12:30pm EST on October 12, 2022
