3SOF

fyi:
Buyers Wading In
By Rev Shark
RealMoney.com Contributor
8/28/2006 10:37 AM EDT
We have a productive start to the week. Buyers seem to be inching in very slowly after a flat start. Breadth has been moving up nicely while oil and gold are leading to the downside.
For quite a while the market was very positively correlated with the movement of oil. If oil was strong, the market was up, and vice versa. I'm starting to wonder if that correlation is ending as concerns about consumers start to grow. Obviously gas prices have some impact on consumers, and if that pressure starts to diminish, it has some positive aspects. Keep your eyes open for a shift in sentiment here. If oil continues to fall and the market reaction is positive, that is an indication that there is a basic change in character taking place.

I've been doing some nibbling this morning and have added a few buys including Aether Holdings (AETH:Nasdaq), Gigamedia (GIGM:Nasdaq), Syneron Medical (ELOS:Nasdaq) and The9 Ltd. (NCTY:Nasdaq). I also have lightened my hedge substantially but will look to remount. I think the bulls have the edge for now, and look for them to hold us steady. However, the bears haven't gone away, and they will be anxious to press once again if we get a decent upside move on low volume.

fyi:
just started a small position @ 9 $ 

Technically GIGM really is doing all the right things. Higher highs, higher lows. Banging its head on rock hard resistance. Just lacking the power tool of VOLUME to break it convincingly. Today will be the 5th attempt at that $9 resistance zone since the post earns breakout failure and sell off.
Weekly chart is nice:

9.20$ now but no volume ...

They announced stellar results and the stock tanked. 
Lately Institution holdings increased substantially.If they release any PR we might see a spike and easily push this to low teens.

Getting back to GIGM.

Trading Idea:
Last month GIGM showed up on our filters for breaking out the correctional pattern that was in place, after that GIGM had some extreme volatility trading near its highs and retesting supports right after that.
Volume is not strong at the moment, but this is more like a positional trade rather than a momentum / breakout trade. GIGM technical pattern is bullish, with consecutive higher lows and higher highs; right now GIGM is already trading above $9.00 which is an important reactive level and resistance, we expect this stock to keep its path to higher ground and ultimately to break its highs.

Trading Plan:
Buy GIGM at or near the open and set a stop @ $8.39 for this position.

Regards,

Frederick,

This is a tough one for me.   It looked good until earnings.

My concern is that after the breakout above the blue down trendline off the May high, which resulted in a rally to the gap opening at earnings, we've got:

1. A 3-day flag pole, beginning with a very heavy volume reversal at earnings (August 8 candle).

2. A bounce off the 50DMA, and a successful re-test of the breakout above the blue down trendline, as you mentioned, but it's a low volume Bear Flag rally, and there are four hits to the top of the Bear Flag, including yesterday.

3. This little Bear Flag looks like a "fractal" (a repeating pattern) of the larger pattern (in red) off the June low, at 6.18 (an A-B-C corrective rally).

If GIGM can take out the top of the current Bear Flag, that would look better, but the heavy volume reversal at earnings still bothers me. 

Just a few thoughts.  Good luck everybody.

Hey Melf (and all others

For me that bear flag is less important as a reversal indicator than $9.50. But that said your top of the bear flag pretty much coincides with $9.50 anyway, so whilst we approach from diffrent perspectives our conclusions concur. Approaching a critical pivot point for GIGM by the looks, failure at that area could indeed set off a retest of the 50sma (which coincides with mid term ascending support line)

Quote from: Melf Elf on August 31, 2006, 06:03:36 AM
Frederick,

This is a tough one for me.   It looked good until earnings.

My concern is that after the breakout above the blue down trendline off the May high, which resulted in a rally to the gap opening at earnings, we've got:

1. A 3-day flag pole, beginning with a very heavy volume reversal at earnings (August 8 candle).

2. A bounce off the 50DMA, and a successful re-test of the breakout above the blue down trendline, as you mentioned, but it's a low volume Bear Flag rally, and there are four hits to the top of the Bear Flag, including yesterday.

3. This little Bear Flag looks like a "fractal" (a repeating pattern) of the larger pattern (in red) off the June low, at 6.18 (an A-B-C corrective rally).

If GIGM can take out the top of the current Bear Flag, that would look better, but the heavy volume reversal at earnings still bothers me. 

Just a few thoughts.  Good luck everybody.

Hi Melf !
Thanks for your input here (applaud) !

About your TA on GIGM, it's another way of looking into it, but slight different from my approach. I'm aware of the earnings reversal move, and some possible bear configurations here, it bothers me but even so I see some other possible developments here.
I try to look into GIGM on a very simple way:
- I like the stock and I like the sector
- Our Fundamental Department (Michael) likes the Stock (LOL LOL)
- I see a breakout + Retest on the mid term chart with a short term swing to the upside and momentum building in.
- We've missed a re-entry on GIGM at 6.50/7.00, we missed another re-entry at the breakout (8.50), and now we had another interesting risk/potential ratio for a setup and we are taking the risk, even with low volume, GIGM is managing to perform its patterns.
- If we manage to get some volume at these levels, the chart will look much more interesting lets wait

Quote from: AussieTrader on August 31, 2006, 09:00:18 PM
Hey Melf (and all others

For me that bear flag is less important as a reversal indicator than $9.50. But that said your top of the bear flag pretty much coincides with $9.50 anyway, so whilst we approach from diffrent perspectives our conclusions concur. Approaching a critical pivot point for GIGM by the looks, failure at that area could indeed set off a retest of the 50sma (which coincides with mid term ascending support line)

Hi Aussie,

Thanks for your inputs too (applaud).

I'm not expecting $9.50 to create a big barrier, but yes... that's a reactive zone and we should observe it.
GIGM is doing consecutive higher lows and higher highs; our stop price is taking that into consideration, now we are just waiting for another higher high

Update:
A nice session for GIGM with a slight volume increase and a bullish candle setting new short term highs for this rebound. $9.50 should provide some resistance, $9.00 should provide some support, and momentum is getting better, so let's wait.

Trading Plan:
Hold GIGM with a stop @ $8.39

Regards !

Quote from: Ramsburg on August 31, 2006, 10:37:44 PM
About your TA on GIGM, it's another way of looking into it, but slight different from my approach

Frederick and Aussie,

Thanks for the interesting discussion.  I was looking at GIGM the same way (your blue lines, Frederick) until the earnings, but GIGM still could continue to ratchet its way higher on relatively low volume, as it is doing currently.  I'm probably allowing that heavy volume reversal to bother me too much, but those tend to make me a bit wary when they occur at any kind of top, or at a breakdown, like on May 22, after earnings.   

Heavy volume after a lot of selling, like on June 13, can be an indication of panic and capitulation, which in this case, it was (chart below is a Candlevolume chart).

At any rate, I was glad to see GIGM close higher yesterday, and hope that it continues to rally for you guys.  Good luck!

Sold at 9.62, will buy back if the gap fills 

Update:  back in at 9.45, not a huge saving, but every bit counts in this market...

Frederick and Aussie,

Nice day for GIGM.  The big reversal candle kept me out of it, dang it.  Good job, guys.  Applaud you both.

Quote from: tokyopua on September 01, 2006, 09:40:27 AM
Sold at 9.62, will buy back if the gap fills 

Update:  back in at 9.45, not a huge saving, but every bit counts in this market...

tokyopua,

Hey, that was some fancy dancing!    Nice going! 

Quote from: Melf Elf on September 01, 2006, 03:36:09 PM

Quote from: tokyopua on September 01, 2006, 09:40:27 AM
Sold at 9.62, will buy back if the gap fills 

Update:  back in at 9.45, not a huge saving, but every bit counts in this market...

tokyopua,

Hey, that was some fancy dancing!    Nice going! 

Heh, thanks Melf, its fun when it works.  I figured the gap had to fill because there was no news, and worst case if it filled then just kept going down after I bought back then at least I saved some of the loss.  That cash delta made in about 20 minutes was enough for me to buy my groceries for two weeks (at Whole Foods no less, haha ).

Then, pretty cool to see it go back up and then some to 9.80.  Go GIGM, hopefully it isnt done going up 

Update:
GIGM is increasing speed, volume is slowly getting higher and the overall pattern is looking way better now. GIGM may need to consolidate these levels, but we expect a continuation to high ground to happen in the short run.

Trading Plan:
Hold GIGM with a stop @ $8.39

Regards !

I'm long this Mgmt team.  Holding since Dec 2005 when first bought by 3SoF, and was not shaken out.  All other stocks I will trade short term.