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Getech Group and a fundamental error

Last updated: 18:00 02 May 2014 BST, First published: 17:00 02 May 2014 BST

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By Alistair Strang, www.trendsandtargets.com

I’m always quite firm about my team ignoring any background information when we run the numbers against a share. Nothing clouds judgment more when knowing what a company is doing. It allows a hint of bias into our expectations.

With this company though, I’ve always been quite admiring of their range of cordless vacuums. These wonderfully lightweight devices can hang flat against a wall on a coat hook yet have sufficient power to cope with the hair from my golden retrievers. As a result, I was quite bamboozled when I realised the numbers suggest their share price is heading to 31p.

Eventually the penny dropped. This is not G-Tech, but Getech the geoscience services firm.

The chart below shows a share, which from its launch in 2005, had a target price of 102p. It achieved this goal at the start of 2014, even managing to close above my target level for a few sessions. However, a couple of things happened in February that bother me. Firstly, the price was ‘gapped’ down below 102p and secondly, it broke the mid-term red uptrend.

Since that point, the share has followed our rules. The price has back-tested the trend break and now appears hell bent on reaching 51p next. In the event of the share closing below such a point, I’ve no choice but to view it as heading to a bottom at 31p and this, amazingly, would coincide with the yellow, long-term uptrend. In other words, the drop potential makes visual sense and this is always an important part of our movement criteria.

 

 

What does the share need do to get out of trouble?

Currently trading around the 60p level, I’d be fairly comfortable with any recovery exceeding 71.5p as this would move the price into a position where I can easily speculate about growth to 87.5p initially. This is comfortably above the blue line and capable of future miracles.

But for now, I’ve little choice but to hope the 51p level will be designated as a bounce point as it seems some effort is being employed to drive the price down currently.

As usual, any requests for this column please let me know at info@trendsandtargets.com

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