Technical Summary: The above chart is a 1 year chart of Healthscope Ltd. Each candle represents 1 day. The HSO chart represents the difficulties that can face investors when trying to pick a bottom. The question is always, how low can it go? In the case of HSO the 1 year chart is dominated by 2 significant gaps on company annoucements. The first occured on a profit warning in October 2016 with the stock gapping from $2.90 to around $2.40. Retrospectively the market did give some warning to this with “smart money” appearning to get out before the annnoucement, this would have been difficult to identify in real time. The stock then traded on a slow moving downtrend until the second gap that occurred last week on earnings. The second gap did not give investors any “smart money” warnings and has been accompanied by significant volume. This indicates institutional selling, not just mom & pop investors that are liquidating positions. If you do not own a position in HSO there is not much to do here, unless you are someone that is trying to pick a bottom. The weight of the selling volume suggests that the stock is
unlikely to pop back like a rubberband. Every investor or trader that is long the stock is now unprofitable. This suggests that further upside is likely to be weighed down by selling supply. For the trend to reverse it is likely that the stock will have to go through a period of consolidation.