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Sellers are taking control of BSM Technologies shares

Newly built cars sit in a shipping lot near General Motors Car assembly plant in Oshawa, June 1, 2012.

© Mark Blinch / Reuters/REUTERS

Hello Lou,

I have an average price of $1.30 for GPS. Do you think there is more room upside?

Cheers,

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Jimmy

Hey Jimmy,

Thanks for the assignment.

BSM Technologies Inc. is involved in providing their customers with systems to better manage and track their stationary and moving assets. On June 3, 2013, the company acquired AutoVision Wireless Inc. in a $14.5-million cash and stock deal in an effort to expand their footprint in western Canada. On June 12, 2013, it was announced that the CFO had resigned.

An examination of the charts will provide greater evidence to answer your question about future potential.

The three-year chart indicates that GPS has been generous to investors who saw the opportunity and caught the ride. You, my friend, are sitting on healthy profits generated over a short period of time which probably prompted your email. Investment management is really about managing expectations and risk. At this moment in time the stock looks to be taking a breather. Volume has thinned out over the last week and resistance has formed at $1.80.

The RSI and the MACD on the six-month chart both generated buy signals in April as the shares caught a bounce off $1.10 and broke above the downtrend line that had been in play since February. In May the shares moved through resistance along the 50-day moving average and ran to a 52-week high of $1.81. The momentum indicators are currently signalling that sellers are taking control of trading. The next level of support comes in at $1.60.

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GPS isn't getting a lot of Street coverage, which would help get the story into wider circulation with investors and representatives. At this point in time I would advise booking profits and seeing if support holds at $1.60. If it doesn't you can buy back in at lower levels assuming that you are still excited about the prospects for the company.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

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About the Author
Lou Schizas

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality - and a true believer in the happiness-inspiring powers of capitalism. More

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