I Dream The Auto Electric

Jun 15th, 2009 – Comment

Dear Sir, Is there a real explanation for the run-up of AZD and why on earth can it fall so fast in one day June 2nd.  I can understand some profit taking and the 100,000, shares at 25 cents which someone could profit by, but the drop confuses me. Bill Hi Bill, Thanks for the […]


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Dear Sir,
Is there a real explanation for the run-up of AZD and why on earth can it fall so fast in one day June 2nd. azure I can understand some profit taking and the 100,000, shares at 25 cents which someone could profit by, but the drop confuses me.
Bill

Hi Bill,
Thanks for the assignment! And you can call me Lou. Its been a while since I looked at Azure Dynamics (AZD TSX) which has been developing niche applications of hybrid technology for commercial vehicles. They have integrated their products into 40 different types of trucks and buses and have logged over 25 million highway miles. But the volume of sales is low. In all of 2008 their total revenue was just over $7M and they continue to lose money.
In their annual report their goal is to double revenue in 2009. They have sold 105 systems to Purolator, 20 to FedEx and have 27 dealerships selling their product line. Which tells me that they are still in the nascent stage of market penetration which in most cases will drive a man to drink!azd1

When I look at the chart the best explanation for the selling in early June was that the signals generated by the RSI and MACD  and resistance at $0.30  indicated it was time to take some profits off the table.

The RSI showed an overbought condition through a good part of May and the MACD turned down as well. When traders see those flags on the track they pull into the pits to refuel and get a tire change.

azd2

The longer term chart shows that the downtrend has been broken and we do have a golden cross in place which suggest a continuation of the uptrend.

On June 11 the company announced a private placement which hasn’t been priced and which is looking to raise $10M.

Given the generally positive environment for green transportation technologies AZD seems well positioned to advance its case but it needs to drive sales much faster to really get traction.

Happy Capitalism!

Categories: Automotive
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