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Friday, July 25, 2014

Technical updates – Bartronics and Bilcare

There are two kinds of stocks that never fail to attract small investors – ‘theme’ stocks and RJ stocks. Just like a flame never fails to attract moths. The end results of such attractions are almost equally disastrous.

There are no better examples of these two kinds of stocks than Bartronics and Bilcare. The former is a ‘theme’ stock with a story (high-tech electronics, bar code readers - the next great invention since sliced bread, etc.) that was successfully promoted by brokers and analysts.

The latter is a typical RJ entrapment. Supposedly bought at much lower prices and well publicised as being in RJ’s portfolio, small investors piled into it to push the stock price sky high (to 1830 in Jan ‘08) before the bottom fell out.

With the stock market touching a lifetime high, several ‘theme’s are playing out on message boards (water treatment, agri-related, defence-related etc.), not to mention current RJ favourites. Do yourself a favour. When you hear ‘theme’ or ‘RJ’ in a conversation at a get-together, excuse yourself and leave. 

Bartronics

Bartronics_Jul2414

The stocks price of Bartronics had touched a high of 294 in Jan ‘08. It then dropped to a low of 55 in Nov ‘08, recovered to a high of 194 in Jul ‘09 and then had a one-way fall that seems to have finally bottomed out at a low of 5 touched in Aug ‘13.

The stock has since tripled by closing at 15 on Jun 6 ‘14, but is consolidating sideways within a symmetrical triangle pattern. The stock has returned to a bull market. The ‘golden cross’ of the 50 day EMA above the 200 day EMA has technically confirmed that.

But triangles are unreliable. The break out can be upwards or downwards. Daily technical indicators are looking bearish. If you are thinking about buying because the stock is cheap, forget it. Fundamentals are awful.

Bilcare

Bilcare_Jul2414

The stock price of Bilcare dropped from 1830 in Jan ‘08 to a low of 36 in Dec ‘13 – losing 98% from its peak (like Bartronics). The stock closed at 106 on Jul 7 ‘14, almost tripling from its Dec ‘13 low and returning to a bull market.

The stock price has formed a ‘rounding bottom’ bullish pattern, suggesting more upside. There is resistance at the 138 level, but it may take a while to get there. Daily technical indicators are looking bearish. Some more correction is likely.

Fundamentals are almost as bad as those of Bartronics. Loss-making with a huge debt that is like a millstone round its neck. Best to avoid.

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