SouFun Holdings Ltd (NYSE:SFUN) – Testing strong support in $5.00-$6.00

SouFun Holdings Ltd (NYSE:SFUN) is enjoying a corrective bounce this week which is seen in the latest bout of gain of 7.57%. The volume at 12 million was slightly higher than the average volume of 9 million but still the lowest of the last 3 sessions. Among the many bullish recommendations by various broking houses, JP Morgan upgraded it to “buy” from the earlier “neutral” with a price target of $8.50.

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SouFun Holdings Ltd (NYSE:SFUN) had declared a special dividend last month. A dividend of $1 will be paid on March 31st to the investors of record on March 13th 2015 and the stock is trading ex-dividend from March 11th.

SFUN

The last quarterly result of SouFun Holdings Ltd (NYSE:SFUN) was not really pleasing for the market though it had reported an earnings per share of $0.21 against the expected $0.14. The revenue of $223 million was higher by 2.7% on a y-o-y basis. While the analysts expect the EPS to improve dramatically in the next few quarters, the technical state demands a lot of conditions to be met before one can be really hopeful.

A single glance at the long term chart suffices to show that the piece has been testing a very important long term support band in $5-$6 for the last two weeks. The buyers from this area must push the stock strongly enough to break the downtrend channel to break on the upside, which would be the first bullish condition. Then a higher high above $7.50 would be required to register the first higher high and reverse the trend. If these conditions are met, then a rally to $8.50 or even $112 levels can’t be ruled out. The bulls may feel encouraged by the volume pattern, which shows an increase in the last two weeks, accompanying the rally.

John Eisler

John Eisler

John is a special projects and general assignment reporter, noted for breaking several exclusive stories.