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Solos Endoscopy, Inc. (PINK:SNDY) Headed Straight to the Oversold Area

By: Hotstocked.com articles









Posted on March 19, 2012 at 12:43 PM EDT
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Having closed the last two pre-weekend sessions on a high note, Solos Endoscopy, Inc. (PINK:SNDY) appears to have gathered such a huge momentum that it has just got off to a flying start in today's sessions. As good as this development might seem, charts indicate that SNDY might be getting a little overbought. SNDY closed the last two trading sessions gaining 11.6% and 37.5%, respectively. Within the first hour of trade today, SNDY has already shot up 29% and is showing no signs of slowing down. As a result, the RSI indicator has now moved dangerously close to the overbought area, which is a classic bearish signal suggesting that SNDY's surge is not likely to last much longer. Last Friday, the company announced the launch of SteriTAP, a brand-new endoscopic instrument line. The latter has also been approved to receive the CE Mark which will alleviate its worldwide distribution. Given that the demand for endoscope services has been on the increase for quite a while, the new line could have the potential to increase shareholder value as long as it meets with success on the real market. Occupying the healthcare industry, Solos Endoscopy, Inc. is primarily focused on developing high-quality and novel instruments for screening, diagnosing, treating and managing a wide variety of medical conditions. At present, the company's product portfolio encompasses rigid endoscopes, hand held surgical instruments, as well as video equipment for minimally invasive surgical operations. As of Sept. 30, 2011, the company had cash reserves of $6,877, down 32% from the fourth quarter of 2010. Unfortunately, with a current ratio coming in at 0.46, SNDY has trouble paying off its short-term obligations. Moreover, its D/E ratio currently stays at 0.77 and could deteriorate the company's leverage position in the event of external capital injections. Technically speaking, SNDY's current market run appears to have reached its full potential now. Provided that the company makes a breakthrough with its new endoscopic instrument line, its market value could stand a good chance of a new upward trend in due course.