Thursday, October 14, 2010

IDCC Watch

The digital wireless tech company InterDigital Inc. (IDCC) -- think cellphones -- is showing bull phase on Person's Proprietary Signal (pps) as the price approaches the most recent higher high in an uptrend that began Aug. 31. I'm adding the stock to both my Fast Trading and Slow Trading watchlists as a potential bull play.

IDCC $30.06

The stock has excellent fundamentals -- no debt to speak of and an 83% return on equity. A respectable 56% of the stock is owned by institutional investors.

On the downside, the company makes cellphone equipment -- not exactly a rock 'em sock 'em sector -- although IDCC is one of the more successful companies in the group.

The three-month chart is a mixed bag of signals, with the pps and macd showing bull phase, but the parabolic sar and fast stochastic remaining in beardom.

And volume typically runs under 600,000, so it's not one of the big, liquid behemoths of the marketplace.

On the Person's chart, the price is trading between the midpoint and the upper weekly pivot point. The pps, however, only spent five days in bear phase, and today's phase switch may well be prone to quick whipsaws.

Person's Table
ppspps openupper pivotlower pivot
IDCC $30.06 $30.00 oct14 $30.45 +1.3% $28.68 -4.6%

The swing high of Oct. 4 -- $30.67 -- is the main near-term resistance level. A break above would clear the way for IDCC to challenge a swing high of $33.69 set in February 2009.

Reversal Levels
  • $33.69, +12.1% (2009 swing high)
  • $30.67, +2.0% (October swing high)
  • $30.06 --- You are here.
  • $28.99, -3.6% (20-day moving average)
  • $29.90, -3.9% (October swing low)
  • $26.70, -11.2% (200-day moving average)

On the slow trading chart, the 50-day moving average crossed above the 200-day moving average in late September, a bull signal by my long-term trading strategy. The prior bull phase lasted from January to August but the stock gave up most of its gains before the exit signal showed.

I judge this to be a stock for entrance on the crossover signal but a quick exit on a significant stock drop.

Slow Trading
IDCC $26.70. $27.16

Bottom line: I like IDCC above the $30.67 resistance level. The Heikin-Ashia candlesticks signalled an uptrend on Wednesday that makes this week a reasonable entry point. However, earnings will be announced after the close on Oct. 27, and the cautious trader will want to wait until after that announcement before opening a position, as a guard against negative earnings surprises.

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.


  • h-a trend - Heikin-Ashi trend.
  • pps - Person's Proprietary Signal.
  • psar - Parabolic Stop and Reverse
  • ma20 - 20-day moving average
  • ma200 - 200-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

  • h-a trend: Determined by the Heikin-Ashi candlestick, green for up, red for down. Heikin-Ashi averages six days for high, low and close, signalling uptrend if the close is in the upper half of the range and downtrend if it is in the lower half.
  • sto: green for bull, red for bear.
  • sto zone: green for overbought (80+), red for oversold (20-), yellow for neutral zone
  • psar, pps, macd: green for bull mode, red for bear.
  • macd trend: green for rising, yellow for sideways, red for falling.
  • neutral.
  • ma20, ma200: green for above the average by more than 1%, red for below the average by more than 1%, yellow for within 1% either side of the average.

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