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Healthway Medical: Prime for a rebound?

Monday, November 22, 2010

Although I would not buy more Healthway Medical shares based on its current fundamentals, technically, it looks like it could be an interesting trade.

On 25 Oct, I mentioned that "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."  Read blog post here.

15c is being tested once again as support. This is the fourth session in a row and volume has been declining.  The 20dMA has stopped declining and has flatlined. Price has stopped moving downwards in recent sessions. The floor at 15c has gained in strength.

Look at the MACD and we see that it seems to be forming a higher low. The MACD histogram has turned green, a buy signal. The MACD forms a positive divergence with the decline in share price. This is a suggestion that we could be seeing a reversal soon. Also, Stochastics is oversold and we could see a bullish crossover soon.

In the event of a rebound in price, we could have the formation of a double bottom with the neckline at 16.5c. If the double bottom is valid in such an instance, the eventual target price is 18c which would break the counter out of the down trending channel.

With lacklustre fundamentals, this would purely be a trade.

Related post:
Healthway Medical: 3Q 2010 results.


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