Redknee Solutions Inc. has been selling off since July 2015

Nov 30th, 2015 – 1 Comment

The long term trend is down


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Hi Lou,

Could you give me your outlook on Redknee Solutions.

Thanks,

Brent

 

Hey Brent,

 

Thanks for the assignment. This will be my first look at the charts for Redknee Solutions Inc. (RKN TSX). The company sells billing software to wireless operators and is currently developing products to monetize the internet of things. The business model at RKN involves selling software as a service which provides a recurring stream of revenue. The market capitalization of the company is $379 million, the average daily volume over the last three months is 260,605 shares, and there are no dividends paid to common shareholders. These factors indicate that you should be looking at the stock for growth.

An inspection of the charts will inform my outlook for the stock.

 

RKN

The dominant feature on the three-year chart is the downtrend that started in December of 2013 when the shares traded for close to $8.00. The retreat took the shares down to a 52-week low of $2.83 in February of 2015 where RKN became oversold and attracted buyers. The new leg up ran until July of 2015 touching a 52-week high of $5.24.

Since then the shares have been trending lower meeting resistance along the moving averages.

 

 

 

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The six- month chart pulls focus on the new downtrend that started in July and continues to provide resistance to any move higher. What is also visible is the break below support at $3.60 in November where RKN met resistance along the 50-day moving average.

The evidence at hand is not pointing to a trend reversal at this time. If you are attracted to the story you will want to monitor how the stock is trading and look for opportunities to profit from the buy and sell signals that emerge.

Next time I will review the case for DH Corporation (DH TSX) for Mario.

 

Make it a profitable day and happy capitalism!

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