Very rarely do I mess with stocks under $7, but GigaMedia (GIGM) was brought to my attention by a TWI reader. So I decided to take a gander at the technicals.
With the 52 week high under $21, I am pretty convinced that GIGM is a slow moving stock, so keep that in mind. The 1 year time frame chart below pretty much backs my theory up.
The positives GIGM has going for itself is that it just crossed the 20 and 50 day moving average as well as the 1 year trend line.
The negative GIGM has going for itself is that the 200 moving average has not leveled out yet. This means that the lower it goes the lower a key support becomes, which obviously relates to a lower return.
So that is the year outlook.
If you are looking to hold on to this stock for shorter time, than beware. It looks like the stock has bounced off a 3 month resistance.
Overall, I wouldn’t be comfortable entering this stock until it hit somewhere around $8. How much room for profit that will leave us depends on how the stock moves once we get there.
In the end, this stock is too slow for my taste. Unless you are moving in and out of positions within days, this stock will most likely take some time to head up higher than 4 points. On the bright side, with the stock so cheap, you can always just grab some shares and throw them in the closet until the fall.
What do you think?
MarketClub - Check out a free trend analysis for GigaMedia