GigaMedia Limited (NASDAQ:GIGM) Starts New Rally?

[[tagnumber 0]]Yesterday the share price of GigaMedia Limited (NASDAQ:GIGM) spiked out of the trading range which represented another session of huge gains for the illiquid penny stock. The action could get noticed by more traders today and the stock could get higher even though the company‘s news from Wednesday was not really on the positive note.[[tagnumber 1]] [[tagnumber 0]][[tagnumber 3]][[tagnumber 1]] [[tagnumber 0]]GIGM recorded a 21% increase in its share price yesterday after it closed the market at $0.557 on above the average trading volume. That was not a session with record trading activity and the stock remains very illiquid, however, technical indicators for GIGM give strong bullish signals for today and the stock could easily break up higher and out of the trading range.[[tagnumber 1]] [[tagnumber 0]]The company is based in Taiwan and provides online gaming and cloud computing services. The largest part of the company‘s revenues came from mobile games in the second quarter of this year, however, disappointing financial results explain why the stock‘s market cap is three time below the book value of equity and the reported cash on hand as of the end of this June.[[tagnumber 1]] [[tagnumber 0]] [[tagnumber 10]][[tagnumber 1]] [[tagnumber 0]]GIGM revenues fell 13% while gross profit and EBITDA plunged over 70% within just one quarter this year. The reported 150% increase in net income from last year‘s second quarter was also an accounting illusion as it resulted from gains from the sale of marketable securities, which does not seem promising for creating shareholder value.[[tagnumber 1]] [[tagnumber 0]] [[tagnumber 1]] [[tagnumber 0]]In that sense, the new rally this week could be just covering of short positions by investors. Yesterday, GIGM announced the termination of the agreement to purchase the online cosmetics retailer Strawberry Cosmetics Holding Limited due to a change in the business development strategy of the company. GIGM will have to pay $2 million to Strawberry shareholders in consideration of their consent to stop to acquisition.[[tagnumber 1]] [[tagnumber 18]] [[tagnumber 1]]