Greetings fellow Aterians,

I am not a financial adviser and nothing in this post is financial advice. Do your own due diligence before making investment decisions.

Some of this DD was written a few days ago, and I’m keeping this “as is” since most of the market has played out following my thoughts here. As of Wednesday, June 22, we’ve had a bit of a bear market rally… but nothing

1… Market Debrief and Analysis of previous DD.

Last week in this sub-reddit, I posted what I would call my most bearish DD yet for this stock (which you can reference here). Last week’s price action had little to do with ATER itself, but instead the market’s “Oh shit, the Federal Reserve is about to induce an economic recession to get inflation under control”. Sure enough, after a violent but brief reaction in the major indices (SPX went up 100 points in 13 minutes at one point during Wednesday’s FOMC briefing!), the market quickly found its senses and sold off massively into Thursday.

In late May, my hypothesis surrounding ATER’s price action was centered around the idea that the algo-bots would keep ATER’s price in a falling wedge pattern, so as to bleed the options chain dry heading into the June monthly OPEX (June 17). (Link to this post is here). Sure enough, this falling wedge bottomed out on June 16, reaching a local low of $2.36 a share, which at the time marked the bottom of the Wyckoff Sniper’s 1-hour accumulation zone (meaning: a very heavy demand/spring zone where dip buyers were loaded & ready to buy). June 17 also marked the exact end of a 13-day cycle, which saw a curious well-timed rip but a long and boring dip down into the $2.30 range. Why is 13 days relevant? Because computer algorithms trade low-volume stocks through a series of Fibonacci-based sequences. For reference, Fibonacci numbers are 1-1-2-3-5-8-13-21 (and so forth). 13 is a common sequence, which is often paired with an 8-trading day sequence for form a macro 21-day sequence that may or may not offer clues as to the medium-term trajectory of a stock.

The end of this 13-day cycle is almost too coincidental with the following facts:

1. There are exactly 8 trading days left in June (corresponding with a key Fibonacci cycle).
2. A plausible Fibonacci cycle would be 8 trading days long.
3. The end of the 2nd quarter is June 30, meaning it’s almost time for pension funds to rebalance their portfolios and for other funds to “window dress” their P/L for the quarter (which you can read more about here).
4. Sentiment in the stock market is about as bearish as possible.

(Bank of America’s Bull/Bear indicator is 0… EDIT: took out the image due to processing issue.)

Both of the following are presently true: (1) a massive amount of organic selling pressure across the market has taken place, namely from mass liquidation events and de-leveraging long positions, and (2) a massive amount of short-selling has also taken place to ride these downside moves.

Anyone could make the argument that there is much more downside in the stock market given companies have yet to realize lost profit margins on upcoming earnings and fully factor in demand destruction from everyday Americans not being able to afford basic needs (meaning discretionary items and products represented by individual tickers will see even steeper losses compared to consumer defensive/retailer stocks that offer basic needs). With this in mind, relief bounces are necessary for bear market continuations. Positions sold short rather than positions sold-to-close imply that buying pressure must return, at least for a brief period of time, to alleviate the crowded short trade. If portfolio managers do indeed “window dress” their bottom lines, new short positions entered near the bottom of last week’s drop stand to take some heavy short-term losses if buying pressure into month-end and quarter-end takes place (which would further improve the appearance of these portfolios, as market-wide short squeezes end in parabolic upward moves that can temporarily make things look better than they actually were…).

This assessment by no means some stocks will reach new highs, let alone reach previous highs, and given the confluence of events and the end-of-quarter coming up, I believe a decent short-term trading opportunity is on the horizon for ATER (and most of the market).

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This is unlike any bear market we’ve seen in the last decade, however, so it’s worth being extra cautious during these ultra volatile times. We’ve had two huge rallies the first two days, but have fallen apart at close as of Wednesday’s close. Be VERY careful…

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2… Events from the end-of-Q1 and why they’re relevant

This is where understanding historical price patterns in relation to previous events is necessary to understand. Here is a quick recap:

1. The March FOMC meeting (Mar. 15-16) was preceded with an ATER bottom at $2.14/share. Heading into the end of the week of FOMC, ATER recovered to $2.47/share.
2. While the rest of the market squeezed violently into the end of March (SPY went from $414 to $461 between Mar. 14 and Mar. 29), ATER creeped up from $2.14 to $2.74, before dipping to $2.33 on April 1… and we all know what happened beginning April 4.
3. While the SPY was busy tanking again in early April, ATER went on a massive run from $2.33 to a high of $7.26 on April 19 (the Tuesday after monthly OPEX).

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Figure 2: ATER 1-hour chart, with green box highlighting the current Fibonacci extensions for the current trend (red lines indicating the short term extensions, which are the most relevant for this discussion).

Does this pattern look familiar to you? It should, because it’s nearly an exact track of the March 17-31 ATER price tracking (and a hint that the same algorithm is controlling the stock price…). See for yourself:

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Figure 3: ATER 4-hour chart between March 17 and April 1, when the price went from $2.10 to $2.90 (423% extension) before retracing to 100% ($2.31) before the early April move from $2.30 to $7.24.

If the same algorithm is controlling ATER’s price, and tracking the same pattern as observed at the end of the last quarter, then ATER should expect to tag $2.84 (or within a couple cents) before retracing back to the 100% level (which is $2.31) before the end of the month.

If this scenario plays out exactly as suggested here, this implies that ATER could see some real fireworks at the beginning of July.

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3… Other thoughts and tidbits:

1. This is not the time to get greedy or hope for an ATER moonshot, because frankly the market is swimming in a heaping pile of s***.
2. If we are lucky enough to see this pattern repeat itself, followed by an early July surge in ATER’s price, it will give everyone a nice opportunity to profit off of a short term swing, and perhaps trigger a series of gamma squeezes heading into the July OPEX.
3. I do not have good option data worth sharing right now, because the options chains have been very inactive. With this in mind… for those who have a HIGH RISK TOLERANCE, buying options when volatility in the stock price is low is historically the best time to buy from a P/L perspective, especially with 60+ days-to-expiration.
4. Options analysis will be much more interesting when we see real volume, then it will be much easier and instructive to track when big moves are on the horizon (with the help of proper TA/charting of course).
5. If all of this pans out as I am hoping and as I am interpreting from the data, this will strictly be a short term trading opportunity to profit off of (likely) impending short covering and early quarter cycling into small cap stocks. With the crashing market around us, it is very important to take advantage of these opportunities as they materialize. Long term buy-and-HODLers need not pay much attention to this, but for those like myself seeking a chance to recoup losses from other stocks and make a bit of extra $$$ for the real squeeze (average down), this appears to be as good of an opportunity as any on the horizon.
6. This pattern needs obvious confirmation and several more days to develop. If we get a real capitulatory move down in the SPY (i.e., a “limit down” day), this will likely void this thesis.

Until then… I have my buy orders set in the $2.30-$2.45 range and waiting for a chance to load calls closer to the end of the month if this pattern fully materializes… and I will be more closely watching SPY/VIX until then/hopping on the discord as I have time.

Trade safely and good luck to everyone!