In today’s edition of the Daily Stock Report, we are going to highlight Dye & Durham Ltd (DND.TO), a Canadian Small Cap Computer Software name which has been in the news of late. Last week, the shares dropped more than 17% after the OSC launched a review of the company’s Financial Disclosure and controls and also stating it will be unable to file its audited consolidated financial statements for fiscal year ending June 30, 2025, by the deadline next week.
Dye & Durham entered the unfavored zone in the SIA S&P/TSX Small Cap Index report earlier this year on January 7, 2025, at a price of $17.31. Back then, the shares began its steady downtrend since its peak in December of 2024 at the $21.00 area. The shares did briefly spike back into the yellow neutral zone earlier this summer but did not re-enter the favored zone only to succumb to the selling pressure and fall right back in the red unfavored zone. This exemplifies the importance of following a “rules based” investment process that SIA adheres to which helps eliminate emotion out of the equation and provides an objective, rather than subjective, analysis. As of Friday’s close, the shares are at $8.90 which represents an almost 50% drop in price since the red unfavored zone signal. This underscores the example of staying away from investments in the red unfavored zone. Capital preservation and avoiding portfolio destruction are important concepts at SIA. Many advisors may instinctively look for names in the unfavored zone with the mentality that the shares are oversold and a “value buy” is in play. However, “value buys” may in fact be “value traps” and the shares may continue to fall further in price which is in fact what has occurred here.
In looking at the 3 year candlestick chart, we see a rather wide trading range in the shares from the lows in October 2023 at the $8.00 area to the peak in both January 2023 and December 2024 at the $22.00 level. Since the beginning of the year, we see the bottom fall out of the shares before finding a temporary bottom at the $8.00 area in April. The shares attempted to find some traction trending upwards to the $11.00 level till August, but the last weekly bearish candlestick has developed where the shares fell almost $2.00 which coincides with new release of their Financial Review. What is most interesting is the SIA relative strength readings was already hinting at negative news for several months even before the financial review
announcement as the SIA Platform had indicated deteriorating money flows well before last week’s news. Currently, the shares are approaching a key support level at the $8.00 level which is the bottom of the wide trading range at both October 2023 and last April. This will be an important level to watch to see if the shares can find support there. Resistance may be found at the short but brief rally at a little over a $11.00 prior to the last weeks news release.
Let’s dive in and see what the Point and Figure Chart looks like today. We have added the SIA Report overlay tool with the S&P/TSX Small Cap Index to highlight the effectiveness of SIA’s signals. Here you can see the SIA platform issued its yellow neutral signal in early January followed by the red unfavored signal shortly thereafter. Since then, a steep drop on the shares materialized breaking below its long term uptrend (green) line in March at the $11.89 price point and dropping all the way down the $8.00 level. A brief rally ensued from April to August but in adherence to SIA signals the shares never re-entered the favored zone during this short rally only to succumb to its primary trend, which is downwards . The shares may find some support right here at $8.00 level coinciding with where the shares were in the April 2025 and October 2023. Below that, next support is at $7.54. To the upside, resistance is at its 3-box reversal of $9.38 and above that, the $10.77 to $10.99 level. With a SMAX score of 0 out of 10, DND is not exhibiting any near term strength whatsoever against the asset classes and also has a negative sector backdrop as the Computer Software Sector is ranked unfavored with SIA Market Sector Report.
Dye & Durham Ltd is engaged in providing cloud-based software and technology solutions designed to improve efficiency and increase productivity for legal and business professionals. The company has business operations in Canada and the United Kingdom. The customers include law firms, financial service institutions, and government organizations.
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