New Ondas Price Target as Stock Jumps 18% and Bearish Pattern Blows Up

Earlier this week, Tuesday morning to be exact, I wrote to my "Stocks Under $10" crowd on one of our names, Ondas Holdings  (ONDS) . I was still bullish, but I warned... that early the week prior, the U.S. Federal Communications Commission had further restricted the import of foreign-made drones and foreign-made drone components. 

The FCC had gone as far as releasing a public notice announcing that it will begin denying equipment authorizations for non-U.S. made drones and parts. The FCC informed that drones and parts already in the country would not be impacted.

We explained that while Ondas is a Boston, Mass.-headquartered company, after acquiring and investing in a number of global subsidiaries, some equipment is manufactured domestically in Michigan, and Alabama. However, some equipment is also manufactured in Israel and Norway. That said, there were already plans to bring some Norwegian production to Pennsylvania, but as Ondas does business domestically with the U.S. Department of Defense as well as U.S. allies in Europe and with the Israeli military, I did express optimism that Ondas would find workarounds to satisfy all of these customers.

What I Did Not Know

The stock ran 6.26% on Tuesday. Not because I had reiterated my  price target of $11.70, but because after I wrote the article, and probably hitting the tape almost simultaneously, Ondas was reported to have received an approximate $10 million in new purchase orders across its autonomous systems portfolio. Remember, Ondas provides many types of drones to defense and security-driven clientele such as the United States Marine Corps.

These orders included counter-UAS (unmanned aircraft systems) solutions for critical infrastructure operators. These orders also included integrated autonomous (swarm) drone systems and robotic platforms for public sector security customers. 

The stock was up 8.57% on Wednesday and I see the shares up around 8% at last glance Friday. In fact, ONDS is now up 18.3% since I wrote the article on Tuesday (with a day off involved).

A Brand-New Company!

This (Friday) morning, Ondas announced that the firm will be changing its corporate name to Ondas Inc. The firm will also be relocating its corporate headquarters from Boston to West Palm Beach, Fla. to better support its next phase of growth. Ondas did not say this, but one has to wonder if maybe this was partially to reduce taxes too. That's why I moved my shop from New York to Florida.

CEO Eric Brock commented, "While Ondas Holdings reflected an earlier phase of our development, today, we operate as a scaled, global defense and security technology platform serving both government and commercial customers, with integrated products, services, manufacturing, and operations." Brock added, "Renaming the Company to Ondas Inc. will better align our corporate identity with the operating platform we have built and the global, dual-use markets we serve."

New Chart

The developing double top pattern of bearish reversal that we had our eye on has been completely blown up by the stock's upward momentum. ​

In just three days' time, that momentum that knocked out the double top ​is now best represented by an Andrews' Pitchfork model. This puts the pivot at the central trendline of the model, currently $10.70. Increasing the pivot forces us to increase the price target.

Additionally, since Tuesday, the stock's reading for Relative Strength has moved from slightly better than neutral to slightly less than overbought, which is exactly what we see as a sweet spot. 

Below the chart, the daily moving average convergence divergence (MACD) has gone in three days from an almost non-directional reading to an overtly bullish posture with all three components signaling short to medium-term positivity.

Price Target: $13.50 (up from $11.70) 

Pivot: $10.70 (up from $8.50)

Add: Down to the 50-day SMA ($7.70)

Panic: No reason to panic seen at this time.

At the time of publication, Guilfoyle was long ONDS equity.