How Much do the Fundamentals, Narrative & Sentiment matter for #OTCSET Plays?

I can’t stress enough that the linchpin behind the OTC Special Event Theory is the basic chart pattern I’ve been describing. The longer the duration that the bulls have been putting in some form of higher highs and higher lows, the lower leverage and control the shorts will have on that stock. It’s essentially a very rough way to keep score in the battle of the bulls vs bears. The less historical resistance there is to eat through, the stronger the market there will be for shares and the more effective the company can be with their capital raising efforts.

To put it another way, the stronger the chart elements are on this grand scale, the more of a magnet it should theoretically be for attracting value (via reverse mergers, acquisitions and joint ventures). A strong chart can indicate the company will be able to raise capital with much more ease which ultimately can help them add great value for the dilution it creates. A clean shell with a strong chart means a private company can merge into a very attractive situation when it comes to uplisting and raising capital. This in theory should help put a premium on the charts with the most secular stability, strength and energy behind them, ie the nicest #OTCSET charts.

In my eyes, a compelling narrative or bullish thesis about a stock is only compelling if the chart first indicates there’s room for the sort of potential the narrative spells out. That said, ultimately it’s not the chart alone that will act as the fuel for the fire. A strong SET chart has to be married to a strong turnaround story. $GME wouldn’t be $GME without Ryan Cohen and company turning the ship around and transitioning into a viable company that can survive and ultimately grow. It just so happens that a turnaround, in order to succeed, has to first not be in a losing battle with the shorts.

The fundamentals, narrative and sentiment all very much matter to an #OTCSET play. The fundamentals need to improve drastically for a stock to morph from a shell or mostly a shell to a fundamentally sound business, which in turn will help propel a secular breakout thereby squeezing long term naked shorts. It just so happens that my theory states that the clean shells with the strongest charts are going to be the most attractive vehicles for accessing US capital markets, so then in theory they will attract the conditions that can hopefully grow into positive fundamentals. If the chart is the egg and the fundamentals are the chicken, then in this theory it’s the egg that comes before the chicken… but then the chicken helps to make better eggs (which makes better chickens and so on). Or something like that.

The narratives will be important. We’ll see these stories twist and turn as speculators rush in and prices get ahead of themselves. Sentiment will ebb and flow and all of the normal factors that move stocks will absolutely be in play. At the end of the day though, my theory is entirely predicated around the idea that the value stems from both the clean shell and the strong chart. I’m banking on the idea that these shells, especially the cleanest and strongest charts (where the shorts in theory have the least amount of historical leverage), have functional value in this current macro financial world and because of that value capital will inevitably find it’s way into them. Right or wrong, that’s the theory and where will conviction is rooted. My trust in general is quite low when it comes to players in the markets, but I do trust undervalued assets to eventually be repriced. I trust market players to make easy money, and I see these specific shells to have much more potential value than is currently being priced in.

So the fundamentals, narrative and sentiment all matter immensely with the SET patterns, but those only matter in my theory if the chart is first and foremost up to snuff. And the theory goes that if the chart is nice enough on a grand enough scale, it’s either a sign of the underlying fundamentals/story being favorable, or at least a sign that sound fundamentals will be attracted to the vehicle and value will find a way to be added. Ultimately it doesn’t matter either way, the end result is a strong bullish outcome and ideally squeezing out historical shorts.