Globalstar, Inc. (NYSEMKT:GSAT) saw its shares surged almost 20% to $2.29 per share yesterday on reports it could be up for sale.
Looking at GSAT stock’s daily chart, we see that last week the stock broke and closed above an important resistance line and is poised to continue higher, towards the 2.92-3 area next. The technical chart also shows the stock is on a bull market, as the stock is trading above both 50-day and 200-day exponential moving averages and the 50-day exponential moving average is on top of the 200-day exponential moving average heading upwards. Other daily technical indicators such as MACD and RSI, both are showing positive momentum while KD line is indicating upward swing. Volumes on up days continue to be higher than that on down days, suggesting accumulation. The strategy should be to “buy on dips”.
What the market seems to be saying
For the last few months, there has been a lot of activity around GSAT. Starting with an insider buy by the President and COO in May last year. Starting December though, there have been mixed signals – there have been multiple insider sales – the General Counsel and the CFO, for instance sold around the $1.42 price point in the open market; at the same time net institutional holdings have gone up with over 32 million shares bought by institutions while 8.9 million shares got sold by institutional investors.
Looking at some other facts, the last earnings announcement was generally positive if not overly exciting. Losses narrowed, EPS was consistent with estimates and the company beat revenue projections. That general good performance (which did not reflect in a stock spike, by the way) and news of a potential sale coming at the time of this turn around form a potent chatter-mill combination.
With respect to the signals, Confidence Meter is around 74% so mid-to-long term analysts have been bullish for over 2 months. The consensus price target, though is $2.00 so it may not be surprising to note that with the latest rally the upside has already been achieved.
That said, if the news of a sale process gets some credible backing, it will be interesting to see how the stock behaves. A good way from here is to look at the technical analysis and observe the stock closely.
Technical Perspective in this post is by António Costa, acclaimed trader and the popular author of AC Investor Blog. All views and analysis belong to the author.