It's nice to see GIGM finally get rewarded for good earnings. I don't know how many times this stock has gotten whacked at reporting of earnings. Not just "sell the news." WHACKED.
In November, 2006, Q3 net was almost a quadruple ($0.11 vs. $0.03) and revenues doubled. Result? An opening "gap to crap," then a loss in the stock of 25%
In May of this year, Q1 net more than doubled; revenues were up 95%. Result: GiGM was thrown for loss of 44%, May peak at 16.42 to August trough at 9.02. Yikes.
FINALLY, since the reporting of August earnings, GIGM has been rewarded for good earnings, and deservedly so.
A few chart observations:
1. The April-June H&S Top and the Bear Flag that formed right below the neckline after that pattern broke down didn't help GIGM, technically. Once the Bear Flag broke down in earnest on July 23, 2007, both pattern targets not only got MADE, the stock got slammed well beyond the targets.
That kind of smackdown was so unwarranted, fundamentally, we can see from that standpoint why GIGM has rallied into the current time-frame, almost without surcease.
2. Notice the Bearish Golden Cross of the 50DMA below the 200DMA that occurred on August 28. As often as not, I find that those "Golden Crosses" can be terribly misleading. What I find to be more helpful is the fact that GIGM rallied above both of them, came back and tagged them and found support, then took off to the upside, several days before the "bearish" signal.
The Bullish Cross of the 50/200DMAs didn't occur until September 21 when GIGM was at 16.76, up 85.8% off the August low, so that bullish signal wasn't very helpful either.
3. In the current time-frame, GIGM is extended and looks to be in a Bearish Wolfe Wave/Bearish Rising Wedge pattern (they're similar).
The top of the pattern comes in today, October 3, at 17.6125, so that's something to watch. Watch for a rally to that level that fails, and particularly watch for a rally above the pattern that fails. Wave 5 fakeouts (Bull Trap) are common with Wolfe Waves (if this actually is one). GIGM certainly could just power higher through the top of the pattern. Watch to see if it fails.
For reference, look at GIGM on September 21, 2006. It made the Wave 5 "fakeout" move to 12.55, above a Bearish Wolfe Wave, broke down below the pattern and landed at 9.05 for a quick 28% loss, peak to trough.
The Wave 6 Target line is just what the pattern suggests, if GIGM breaks below the Wave 2/Wave 4 trendline.
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