Saturday, March 25, 2006

REDF Technical Analysis

Fundamentally the REDF and SIFY story is the same as before; these are strong stocks in a strong market (India).

For volatile stocks like REDF, the traditional metrics of Moving Averages don't work very well-these stocks because of their low float and small market cap tend to move in spurts, and modeling them is a Techie's nighmare. Instead, what I have found with high growth stocks like Rediff is that Bollinger Bands seem to work pretty well.

REDF is trading at the lower end of the Bollinger Band, and downside from here is pretty low-barring some surprising negative news or a general fall in the Indian Market.

See chart with Bollinger Envelopes here

All in all, the stock needs to consolidate before moving higher-the fundamentals need to catch up with the stock.

Sanjay John G.


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