What’s Happening to the Share Price of Surf Stitch Ltd?

Surf Stitch

What does Surf Stitch Ltd do?

This is a follow up to a posting I made on 11 June 2015, which you can see here. That was almost two months ago now and it is prudent to update developments on this company.

Surf Stitch Ltd [ASX:SRF] is an online surf and fashion retailer. It provides consumers around the world with access to all the leading brands and products in surfboards and wetsuits, skate gear, street fashion, snow gear, and footwear. They supply just about everything in fashion and accessories that appeals to their core consumers of 15–30 year olds.

In a new strategy the company is not looking to use google ads or Facebook spending to grow interest in its products, but is looking to build consumer engagement and sell its respective brands through a soft selling, content driven program.

They have recently acquired two online magazine websites, Magic Seaweed and Stab, which talk everything connected to surfing, surf news, surf content and surf products. Stab and Magic Seaweed communicate to over three million people a month .This is on top of the six million customers a month already talking to Surf Stitch online stores.
Surf Stitch will use these content networks to gently sell their merchandise to surfing’s core. They can sell their board shorts (and 30,000 other products) without having to mention board shorts once.

That’s interesting. However, if you learn only one thing, it should be this: invest in the chart, not the story.
What is the chart telling us now?

What does the chart look like?

I find it helpful to bring up a chart. Here’s the updated daily chart of SRF.

Surf Stitch Graph

Source: STEX

Since my last update the company has had a big early July, on no news. It has formed two minor bottoms and two minor tops. This gives you some reference points and tells you what you need to know about the future of SRF.

What now for SRF shares?

The market will tell you what the future holds for SRF and the success or lack thereof of its new soft sell content strategy.

During the month of July Surf Stitch found support, not once, but twice, at around $1.80.

Likewise, it has made two minor tops at around $2.00.

Leaving the story behind, you now have all you need to know about this stock and where to apply some risk management.

You just need a little charting knowledge to know how to proceed. You can get that chart reading knowledge here. You remain at a substantial investment disadvantage without it.
Terence Duffy,
Research Analyst, Cycles, Trends and Forecasts

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