3SOF

Update:
News:
- Conexant Acquires Zarlink's Packet Switching Business

Earnings will be released today after the market:
The conference call will take place on Thursday, October 26, 2006, at 5:00 p.m. Eastern Time / 2:00 p.m. Pacific Time.

We are going to hold CNXT through earnings, with the same trading plan, about the Acquisition, personally I don't think it's much relevant here, and I don't see it as a clue for the earnings, since it's only a $5M business, but the recent drop on the last sessions may represent that a possible issue on the earnings could be already discounted or a possible good surprise or neutral news may cause a better reaction since many traders have already sold afraid of the earnings call.
CNXT just tested a pivot point, the interception of its ascending support and the previous descending resistance (now a support too), this level should provide a positive reaction on a technical point of view, of course that the earnings event should cause some volatility here, but we'll take the risk.

Trading Plan:
Hold CNXT with a stop @ $1.82
Note: Anyone not comfortable with holding this position through earnings should exit this position today.

Need a Breakout from this
Symmetrical Triangle.
Back above the 50-day Ma

Recent CandleStick Analysis
Very Bullish
Oct-25-2006 Homing Pigeon 
Oct-23-2006 DOJI 
Oct-20-2006 Homing Pigeon 

Support @ $1.97...1.79...1.60
Resistance @ $2.19...2.32...2.50

52wk Range: 1.60 - 3.90
Volume: 24,937,157
Avg Vol (3m): 15,072,700

Technicals
MACD is Bullish....crossover of centerline
Close Above the 50-day MA
Close Above the 13-day MA
Most Actives
Percentage Gainer

Last Price Quote is:
3.78%above 13-day MA
3.08%above 50-day MA
RS Rating: 48 

Fundamentals
Earnings Expected on Oct 26

Key Data:
Market Cap (M): $854.42 
P/E Ratio: NA 
PEG Ratio: 4.85 
Next Earnings: 01/24/2007
Last Analyst Rating: Underperform

Update:
Earnings:
- Conexant posts loss as it records writedown 
Shares of Conexant Systems (nasdaq: CNXT) fell 1.5% in after-hours trading Thursday after the semiconductor company provided disappointing guidance for the first quarter. Conexant announced fourth-quarter earnings of 3 cents per share on sales of $246 million, compared with the consensus estimates of 3 cents per share in earnings on sales of $247 million. The company predicted fiscal first-quarter earnings of 2 cents per share on revenue in a range of $243 to $248 million, compared with analysts' estimates of 4 cents per share in earnings and $255 million in revenue.

Earnings didn't meet the estimates, but personally I think the market was already aware of it as CNXT has been correcting for the past few sessions, so my overall sentiment on the earnings is neutral. Today's market action from regular session and extended trading was also neutral, with an intraday rally neutralizing the recent correction and a lot of volatility during the after hours (chart in attach), but not putting CNXT on a much different price range compared with recent prices.

Taking this in consideration we'll keep following the chart, the main pivot point we talked about yesterday triggered a positive reaction, so we'll stand with the same trading plan for now:

Trading Plan:
Hold CNXT with a stop @ $1.82

let's see if the news of a loss takes out the stop.

Update:
After the earnings volatility, CNXT is now reacting again on the ascending support. We are still on alert, but CNXT remains healthy from a TA point of view.

Trading Plan:
Hold CNXT with a stop @ $1.82

Update:
The positive reaction continues, despite the Nasdaq selling day, which is always a good sign. We'll keep holding this position and eventually we'll soon be able to upgrade our stop level to follow the ascending support.

Trading Plan:
Hold CNXT with a stop @ $1.82

Update:
Another throwback to the support level... CNXT is still showing consolidation needs at this time, but until it stays above the ascending support, we'll keep holding it. Let's wait.

Trading Plan:
Hold CNXT with a stop @ $1.82

CNXT reminds me of what dwest said yesterday in the DiVX folder, about the chart messing with his head. 

Frederick's Symmetrical Triangle is in purple.  It appears to have "morphed" into the larger Symmetrical Triangle, in blue.

The top of the Symmetrical Triangle in blue has been validated as resistance TWICE:

1. On October 18, at 2.08 (the first red arrow).  The hit was exact.

2. On November 2, at 2.02 (the second red arrow).  The trendline was at 2.03176, so the hit was within one penny.

The bottom of Frederick's Symmetrical Triangle (pattern in purple) also has been validated as support a number of times, as Frederick has pointed out.

Notice that since October 16, all trading has occurred between those two validated trendlines.

The top of the pattern in blue comes in today at 2.02728.   Yesterday's high was 2.02.

A print today of 2.03 would take out yesterday's high, and also would be a technical breakout of the larger (blue) Symmetrical Triangle, as long as CNXT would trade at 2.03, or better.

Quote from: 422fwhp on November 03, 2006, 07:43:17 AM
Today's news:

Conexant's Satellite Set-Top Box Solution Wins ''Leading Product Award'' in EDN China Innovation Competition

Thanks for that news, Jody.  Applause.  We'll see if it's a catalyst for the 2.03 breakout, or not.

Friday's Doji Star Harami (Indecision) is a great depiction of how traders interpreted the "Leading Product" award.

Doji Star: The open and close were identical, at 1.93 - Indecision

Harami: Thursday's "real body" was a 1.96 open; a 1.91 close.

Friday's high: 1.96

Frday's low: 1.91

"We tested both limits of Thursday's "real body," and we can't decide which way to take this stock any better than we could on Thursday.  That's real nice that they got an award, but how is that award going to translate to the bottom line, if at all?  Let's close it out where we opened it, at 1.93, and give it a think over."

Some version of that...

Quote from: Melf Elf on November 03, 2006, 08:19:57 AM
A print today of 2.03 would take out yesterday's high, and also would be a technical breakout of the larger (blue) Symmetrical Triangle, as long as CNXT would trade at 2.03, or better.

CNXT still is trading between the validated trendlines (the top of the blue pattern, and the up trendline off Frederick's pattern (in purple).

Still needs a print of 2.03 for a breakout, and needs to hold that level.

Thanks Melf and Jody (applaud)

Update:
CNXT is not giving many signs now, trading above the ascending support area but failing to breakout to the upside... We expect to watch some action (to the upside) soon, otherwise we'll most likely drop this position, till then we keep the same trading plan:

Trading Plan:
Hold CNXT with a stop @ $1.82

The coil is getting tighter....
Could be ready to pop and rock.

52wk Range: 1.60 - 3.90
Volume: 21,322,270...................
Avg Vol (3m): 14,778,400


Technicals
Close Above the 50-day MA...............
Close Above the 13-day MA........................
Most Actives

Last Price Quote is:
3.20%above 13-day MA
2.78%above 50-day MA
RS Rating: 82 

Fundamentals
Key Data:
Market Cap (M): $854.42 
P/E Ratio: NA 
PEG Ratio: 4.85 
Next Earnings: 01/24/2007
Last Analyst Rating: Hold

Update:
Interesting price development today, once again CNXT reacted on the ascending support, volume is picking up a bit, all we need now is a breakout of the current level. 

Trading Plan:
Hold CNXT with a stop @ $1.82

Quote from: Melf Elf on November 04, 2006, 01:19:52 PM
Still needs a print of 2.03 for a breakout, and needs to hold that level.

The top of the Symmetrical Triangle (blue) came in yesterday at 2.0228

The high was 2.02 .

Yesterday was a THIRD validation of that trendline, as resistance.  Traders clearly are reacting to it.

Last Thursday, the Bulls got a bit weak in the knees and sold it off from just a penny below that trendline (second red arrow).  Yesterday, the Bulls had more courage and were willing to hold the stock at the close, leaving "a barbarian at the gate" on the chart, champing at the bit for a breakout.

A breakout print of 2.03 "should" have some significance.  Minor resistance right there, at 2.03-2.04, then at 2.08-2.09.

Quote from: Melf Elf on November 07, 2006, 03:53:24 AM
A breakout print of 2.03 "should" have some significance.  Minor resistance right there, at 2.03-2.04, then at 2.08-2.09.

There's the technical breakout print of 2.03 .  Now we need to hold it, and take out that near term minor resistance.

Conexant raises senior notes offering to $275 mln
Tue Nov 7, 2006 5:23pm ET27

Nov 7 (Reuters) - Conexant Systems Inc. (CNXT.O: Quote, Profile, Research) on Tuesday said it increased an offering of senior secured notes due 2010 to $275 million from the previous $250 million.

The notes will bear interest, payable and reset quarterly, at a rate per annum equal to three-month London Interbank Offered Rate plus 3.75 percent.

Proceeds from the offering will be used to repay at maturity or retire its outstanding 4 percent convertible subordinated notes due Feb. 1, 2007, the maker of communications and network chips said in a statement.


http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061107:MTFH02583_2006-11-07_22-23-24_WNAS2296&type=comktNews&rpc=44