Can Omega Diagnostics shares extend their incredible rally?

A 10-bagger in just two months, our chartist sees if the shares are more than just a classic 'pump and dump'.

Omega Diagnostics (LSE:ODX) 

We have had emails regarding this lot. With lockdown easing by varying amounts in different parts of the UK, it is easy to wonder if the 'buzz' over Covid-19 shares like Omega Diagnostics (LSE:ODX) shall diminish.

Social media is awash with warnings about a second wave, but it is certain a virus will not pay any attention to gossip.

Against Omega Diagnostics, from reading the company CV, it appears most emphatically not a flash in the pan organisation and, instead, read like a company with many strings to its bow.

However, there is little doubt the most recent surge in share price has been entirely coronavirus related, with the risk that should interest in the disease diminish, so shall this share price.

The good news, for what it's worth, is we can now calculate a maximum price potential at 93p and cannot compute anything higher.

This does not mean the price cannot go higher, just that we have run out of logic.

If the market intends to drive the price higher, it shall be worth keeping an eye on the price at the open in the days ahead.

Should the stock market start 'gapping' Omega up at the open, this will generally prove a pretty solid signal the market intends value it higher than 93p eventually.

However, we are more concerned with price movements since it reached a recent high of 91p.  

The levels of reversal experienced since this high bother us, and now weakness below 59p risks driving reversal to 49p and hopefully a rebound.

Any rebound which proves capable of returning the price above red on the chart below shall probably prove 'real' rather than a short-term hope.

In the event the 49p level breaks on an initial surge downward, our secondary calculation comes in at 28p.

If achieved, we would hope for a real bounce at the 28p level.

Unusually, we can work out an ultimate bottom of 6.5p for this, a scenario which would suggest the entire Covid-19 business has simply been a 'pump and dump' excuse for price movements.

We would hope this can be discounted as nonsense.

Source: Trends and Targets. Past performance is not a guide to future performance.

Alistair Strang has led high-profile and "top secret" software projects since the late 1970s and won the original John Logie Baird Award for inventors and innovators. After the financial crash, he wanted to know "how it worked" with a view to mimicking existing trading formulas and predicting what was coming next. His results speak for themselves as he continually refines the methodology.

Alistair Strang is a freelance contributor and not a direct employee of interactive investor.

All correspondence is with Alistair Strang, who for these purposes is deemed a third-party supplier. Buying, selling and investing in shares is not without risk. Market and company movement will affect your performance and you may get back less than you invest. Neither Alistair Strang, or interactive investor will be responsible for any losses that may be incurred as a result of following a trading idea.