Dead Cat Generex Biotechnology Corp. (OTC:GBNT) Bounces

Have you ever seen a sinking ship rise again? If not, you might have witnessed a similar event yesterday as a certain penny stock miraculously shot up taking everyone by surprise.

Until yesterday, Generex Biotechnology Corp. (OTC:GBNT) had been following a fairly downward route on the charts. By contrast, however, that same stock soared by a staggering 52% out of nowhere as it closed trade at $0.041, a four-week high, and shifted a total volume of 13.7 million, a two-year record. Did GNBT‘s sudden jump in value set the tone for a trend reversal, or it was just a merely technical bounce induced by the way oversold value of the Relative Strength Index?

At this point, there appear to be no evident signs suggesting a major improvement in the company’s business. GNBT still has a long way to go before completing the clinical trials of its product candidates, which means that securing permanent-long term cash flows remains a fairly challenging task. What is more, the company’s cash needs are increasing by the minute as seen from its ever widening working capital gap. To satisfy those needs, GNBT has so far relied on endless external financing, which could hardly go on forever.

Based on the lack of recent news, one could safely assume that GNBT‘s abrupt move yesterday might represent a mere chart pattern caused by the incredibly low value of the RSI. What deserves attention, though, is the fact that GNBT managed to crack the MA(50) shortly before the session came to an end, which could be construed as a good sign for the stock’s performance in the immediate future. A similar surpassing of the MA(200) will certainly serve as a catalyst for a definitive uptrend, as long as the stock goes up high enough. Presently, such a scenario looks highly unlikely, though.