Technical analyst Clive Maund explains why he believes the outlook looks favorable for this energy efficiency company that just announced a merger.
Whilst it is taking rather longer to get moving than we had anticipated, the fundamental outlook for Smartcool Systems Inc. (V:SSC) and the technical outlook for its stock remains very favorable indeed. On the fundamental front, the just announced merger with Total Energy Concepts of Minnesota is viewed as a positive development, and on the technical front the stock is moving towards completion of a basing pattern as we will now proceed to see.
In the last update posted on the 1st February, the stock was not expected to back off again on account of the strength of the gap move up that had just occurred on huge volume. However, it seems it wanted to drop back and mark out the Right Shoulder of what now appears to be a Head-and-Shoulders bottom. Whilst this pattern could take a little while longer to complete, the positive volume pattern and volume indicators (not shown) suggest that it is likely to get moving sooner rather than later, and since it is down near to the Right Shoulder low of the pattern it continues to be rated a buy here.
Conclusion: the outlook for Smartcool continues to be very favorable and holders should therefore stay long, and it is at again at a good point to buy. Note that the favorable long-term charts may be viewed in the 1st February update.
Disclosure: 1) Clive Maund: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. CliveMaund.com disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector.