Thursday, October 28, 2010

IDCC Watch

Wednesday morning's major angst concerned the cellphone tech company InterDigital Inc. (IDCC). Just before the earnings release, the stock showed bull phase with a concomitant price rise.

I always think that signals so close to earnings are suspicious, so the choice was, Listen to the signal in anticipation of a happy dance on earnings day, or stay away and avoid the risk. The former was like putting all my chips on red; the latter, like ignoring a $100 bill blowing down the sidewalk.

IDCC $33.01

As it turns out, the gamble was a good one to take. IDCC's earnings, announced after Wednesday's close, came in 7¢ above the analyst consensus, the stock opened 3.6% above Wednesday's close and moved up to a new swing high that challenges the high set in February 2009.

I wish I could develop a theory of when to listen to the signals. The same situation on another stock, tomorrow, could lead to a 3.6% gap down after the earnings announcement.

A key element in my decision to take the gamble was the 50-day/200-day moving average alignment. The shorter average crossed above the slower one in late September, a long-term bullish sign.

Also, IDCC has good financials, as I have discussed previously, and that often will buttress a bull case.

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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