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Healthway Medical: A floor at 15c?

Monday, October 25, 2010

On 20 Oct, I mentioned that "A gravestone doji formed today as price closed at 15.5c.  As the MFI is in very oversold condition, price could experience a brief rebound and it might be a good chance for stale bulls to lighten their long positions, if any. Strong resistance could be expected at 17c.  This is where we find the 200dMA and it is also where the falling 20d and 50d MAs would be approximating soon."


Two identical dojis formed one after another. One today and one in the previous session. Both closed at 15.5c. Both with a low of 15c. It would seem that Healthway Medical's share price has found a floor at 15c. The volume today was much lower than that of the previous session. This coupled with how dojis suggest indecision indicates a reduction in selling pressure which could help lay the foundation for a rebound or reversal. Indecision in a downtrend is good news for bulls.

The MFI is deep in oversold territory. The RSI is also in oversold territory. The OBV has gone flat, suggesting a respite from distribution activities. Could this be a false calm? Personally, I do not think that the downtrend has played out its full potential.  The lower highs on the MFI and RSI suggest negative demand and momentum and the price action of the counter is obviously caught in a down channel but it is now possibly at channel support. 

Therefore, a rebound to 17c remains probable and it still looks like it would be a good chance for stale bulls to lighten their positions in such an instance.

Related post:
Healthway Medical: Business diversification.

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