To The Moon

$Red Cat Holdings Inc.(RCAT)$ $AeroVironment(AVAV)$ $Kratos Defense & Security Solutions(KTOS)$ 🚁🔥💥 Red Cat Takes Flight: Pentagon Demand Powers the Breakout 💥🔥🚁

🧭 $RCAT is on the move. The stock surged +27.12% last session, closing at 12.89 and holding its gains in afterhours, trading up to 13.09 overnight. This breakout came on the back of a Needham analyst buy initiation with a 17 price target, implying ~32% upside from Friday’s close.

Needham’s thesis is clear: defense spending is rising domestically and internationally, and Red Cat is positioned to capture accelerating demand for defense-grade small ISR drones. They view the unmanned aerial systems (UAS) industry as entering a multi-year supercycle.

📊 From a technical lens, the breakout candle closed above the 0.786 Fib retracement, with the only nearby resistance sitting under the second green Gann arc. Directly beyond that is a vertical Gann bar, which often signals rapid price expansion when breached. Beneath the price is a powerful confluence of support at the 0.618 Fib and a volume shelf anchored to the prior consolidation range.

Momentum indicators are trending higher across multiple timeframes, and the weekly chart shows a sustained bull run. RSI is rising through 64, MACD remains in bullish territory, and Heikin Ashi candles are confirming upside trend structure.

⚡️ Strategically, Pentagon contracts are driving the entire drone sector. Low float names with credible defense exposure are being repriced higher as defense tech becomes a strategic priority. Across peers like $AVAV, $KTOS, $UMAC, and $ONDS, similar setups are forming: tight continuation patterns, accelerating volume, and geopolitical tailwinds.

On 03Oct25, Unusual Machines announced an $800,000 order from Red Cat for NDAA-compliant BLUE UAS components, to be integrated into its FANG drones for defense and government applications. This reinforces Red Cat’s role in the U.S. drone supply chain at a time when Pentagon demand is accelerating.

$RCAT is forming a tightening bull flag, a classic continuation structure, right underneath key resistance. A high-volume break above this zone could trigger momentum traders to pile in, pushing price rapidly toward prior highs and possibly new all-time highs if the $14.05–$15.27 zone clears.

📝 It’s important to remember that most of these firms are still unprofitable, and Pentagon contracts are not high-margin. But in this phase of the supercycle, fundamentals are the wind, not the anchor. Fighting the trend is the wrong trade. Dips are likely to be viewed as accumulation opportunities while global defense spending continues to expand and contract flow intensifies.

👉❓ Are we witnessing the early innings of a full-blown drone sector melt-up?

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