Focus Media Not a Buy… Yet

I learned about Focus Media (FMCN) (a digital media company that operates advertising networks using audiovisual digital displays in China) after reading the blog post of chessnwine.  In his posting he commented that many of the Chinese companies that have been hurt by the “dark cloud” of deceitful bookkeeping rumors may in fact keep legitimate records and are thus undervalued.

On the 21st of June Focus Media’s stock rebounded from their 2 month long downtrend. The stock has now returned to the same price area where it peaked in late 2010 and the location of its 200-day moving average.

There has also been good news coming from within the company as last Tuesday Focus Media reported that it earned $20.5 million in the first quarter against a year-earlier loss as advertising revenues from its LCD display network climbed.

Finally, the popular trading firm Susquehanna recently upgraded Focus Media to Positive from Neutral (citing the sector sell-off as the reason).

So is it the right time buy in?  Let’s examine the chart to gain more information.

On first glace on notices that the Swami Market Mode indicator is still in a red “downtrend” signal since the 25th of May.  Also the Waveform indicator has an emerging orange “peaking” signal suggesting that there might be a swing reversal in the near future.  And finally, although there is a slight sighting of a yellow/green “buy” signal from the Predict indicator the visual marker is not quite defined enough for me to take action.  In sum, I consider this stock a hold at these prices that could be upgraded to a buy if the stock continues to trend upwards.


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