Tuesday, July 6, 2010

PWER Watch

Power-One Inc. (PWER), which makes power management tools for server farms, is showing an on-again off-again series of increasingly high volume spikes, on intra-day rises, as the price approaches a bullish breakout point.
PWER $7.70

Or, rather than a breakout, it might simply be one more leg up in a sideways movement that has lasted since early May. It's impossible to say for sure at this point, and the volume pattern suggests there is more than a little ambiguity among the collectvity of traders that speculate in this micro-cap stock.

The technicals appear to be transitioning toward a bull consensus. The strongest marker today is a switch to bull phase by Person's Proprietary Signal. Also, the price is heading toward a close above the 20-day simple moving average for the first time since June 17.

The volume shows a series of higher highs, each interspersed with a sharp drop in the number of shares traded:

Long-term, like all tech companies, PWER peaked at the turn of the century and then collapsed. It's low point, 33¢, came in March 2009. since then the shares have risen gradually, and then with a quickening pace, showing mainly green bars on the monthly chart for the past year.

Analysts are OK with PWER but not overwhelmingly so. Estimates forecast a gradual rise in earnings per share. Historicals show profits the last two quarters after a string of deep losses, so the company is digging out, successfully, but not spectacularly so, as is to be expected in the midst of this recession.

I like PWER if it break above $8.20 and keeps on rising. If it retreats from that level, then the sideways move is continuing. The option strike prices are $2.50 apart, so the stock doesn't lend itself to sideways trading at the proper levels of maximum profit between $6 and $8.

Reversal Levels
  • $8.45, +9.7%
  • $7.94, +3.1%
  • $7.70 <== You are here.
  • $6.54, -15.1%

The Great Reflation: How Investors Can Profit From the New World of Money
OK. The credit bubble burst. Housing, burst. Shockwaves reverberated. Markets collapsed. What lies ahead as we reemerge from the wreckage.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.

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