Sunday 7 March 2010

Technical Trade: Global Investment House will Make it when it Breaks it (Re-post)



Global Investment House share was trading at the KD1.000 levels 18 months ago and has been beaten up hardly since then. Due to the economic downturn, the stock plummeted and broke every resistance level reaching a price of less than 100 fils. The stock has been trading side-ways since January 2009, between 60 and 150 fils. After the comeback of Zain’s deal, Global was named to be representing Bharti. Although Global came out immediately after that and announced to their shareholders that this deal won’t have any material implications on Global’s book value. Nevertheless, it sure boosted up the overall sentient towards the company and resulted in a hike in the share price from 85 fils in mid February touching 110 fils last week.
It’s not the first time the stock reached this level, but from a purely technical point of view this time is different. The price is trading close to its 200 day moving average which means that if the stock breaks this level upwards it will create a new support level and may leave the “less than a 100 fils” levels for good. As you see in the chart below, last time the price met its 200 day moving average (the time they announced the rescheduling of their debts) it couldn’t break it and fell sharply afterwards. This time if those technical patterers were accompanied by some positive fundamentals, i.e positive earnings results, the stock will rally.

No comments:

Post a Comment