GIGM - Sector: Technology---Industry: Multimedia & Graphics Software

[Melf Elf]

G.,

Thanks for taking the time to post your fine analysis.  It's always good to look at both sides.

I feel GIGM's strength lies in the contrarian position(long) at this point..

When Alister posted that he couldn't find any shares to short, I figured that GIGM must have HUGE short interest.  Surprisingly, there is almost NO short interest.  Only 0.59% of the float is short, which suggests that the contrarian position is short.

GIGM  $ 9.34 
GigaMedia Ltd.  -0.37 
Shares Short 208,819 
Days to Cover (Short Ratio) 0.1 
Short % of Float 0.59 %
Short % Increase/Decrease 84.90 %
Squeeze Ranking™ 0 
Shares Short -Prior Mo 112,938 
Outstanding Shares 50,301,268 
Float 35,450,000 
% Held by Insiders 8.68 %
% Held by Institutions 7.30 %
EPS 0.16 
PE Ratio 60.70 
Sector: Technology 
Industry: Internet Service Providers 
SI Record Date 2006-Apr 
Exchange NSD 

On Friday, GIGM found support at 9.06, above the 8.96 base of the Bearish Rising Wedge.  It's not uncommon for Bearish Rising Wedges to "morph" (change) into a H&S Top.

If that's the case here, the neckline is 8.96 and 9.06, or whatever low we put in near 8.96 on Monday or Tuesday, if  we re-test it, and if it doesn't break.

GIGM would then need to rally to put in a Right Shoulder, then break the neckline (see arrows on the chart).

All speculation at this point, of course.  Isn't it all?   

If that scenario eventuates, I'll have to think about raising my stop another 2%, since the Left Shoulder is at 10.49.  The Right Shoulder should be "something" below that, but 10.27-10.30 could get taken out nominally, even though the Squeeze Ranking is zero.

 

[eliteG]

Aha but the date of your short data is April.. Market topped in May  .. I dont think it is a heavy short position but a dramatic increase recently in tiny lots(small traders) that the Market Makers may take advantage of.

But of course most of the technicals point down.. it will be an interesting one to watch for sure... goodluck Melf. 

[Melf Elf]

Im still short in GIGM 1/2 at 9.71 and 1/2 at 9.30... holder over weekend my stop is at 9.57 hopefully I dont get knocked out.

nullzero,

Let's try this: pretend that we're playing a game of basketball, and that at the opening bell on Monday, GIGM is going to shoot a foul shot.

Bulls and Bears have to line up on both sides of the key, behind the line.  If anyone is caught inside the key (with their stop) when GIGM opens (shoots the foul shot), they get called for a foul (stopped out).

Bears line up above 10.27-10.30.  That's last "known resistance," before and after GIGM broke below the Bearish Rising Wedge, so they're behind that line (with their stop).

Bulls line up below 8.96-9.06.  That's last "known support," so bulls are below that line (with their stop).

Anything in between those two lines is the "danger zone" for both bulls and bears alike, because they can get called for a foul (easily stopped out).  It isn't support.  It isn't resistance.  It's kind of a neutral trading zone for GIGM, like we saw on Friday, and it's a danger zone to have stops in there.

Friday, GIGM opened at 9.86...went to 9.92...tanked to 9.06...rallied to UNCH, at 9.71, tanked again... rallied some more...

That's called "range-bound" trading.  Support isn't broken, nor is resistance.

Sorry for the lousy analogy, but you're standing right smack in the middle of the 8.96-9.06 to 10.27-10.30 range with your 9.57 stop, if you see what I mean.  GIGM could do nothing more than "run around" in that range again on Monday (the analogy just became awful) in "range-bound," fairly meaningless trading, but you're very likely to get stopped out at the "average price" of the trading range between support and resistance.

Just a suggestion: Your average cost is $9.505.  GIGM closed at $9.34.  You're badly positioned in the trade, but you've "got some room" still to have a gain.  If it looks like GIGM is going to tank and break support at the open, you're okay.  If it looks uneventful, but GIGM is heading higher into the 9.40s, toward your 9.57 stop, you might want to think about abandoning the trade with a small gain, and regrouping.  You also might want to think about just getting out of there right at the open, unless it looks bad for GIGM.

My analogy was so horrible, I might want to think about just deleting this post.  

[Melf Elf]

Aha but the date of your short data is April.. Market topped in May  .. I dont think it is a heavy short position but a dramatic increase recently in tiny lots(small traders) that the Market Makers may take advantage of.

G.,

Aha!  I didn't think of that...good one! 

Those data are collected as of the 15th, I believe, and reported near the end of the month.  During this reporting period, GIGM rallied almost parabolically, with only two significant down days in early May, prior to the May 11 earnings top. 

It will be interesting to see what percentage of the float is suicidal, shorting into a parabolic rally, won't it?

 

[vic666]

With all you folks throwing out your theories, I figured why not me?? So here's my take on the chart:

1.) Short term (atleast in the next 1 week), the chart tells me this is going down...first level of support is to fill the gap around $8.30'ish and then let's see if the chart's indicators say it has bottomed out.

2.) The scenario on the chart right now is eerily similar (indicators and price action) to the period during late January and early February - the price topped out at the upper end of the B-band and the RSI, MACD and stochastics give a good indication of a pullback.

3.) What happened next during that period was support at the lower end of the B-band in mid-February at $3.90, but that was not sufficient pullback, the price went back up just a little bit before channeling out and finding real support at the 50 MA in the $4.10 range

4.) The chart tells me something similar will happen - even though a bounce at the $8.30'ish level (to fill the gap) does seem like it'll happen, real support will be at the 50 MA until which churning action will likely take place.

5.) The MACD, RSI and stochastics are still trending down and the chart tells me that's gonna continue.

6.) Friday's action with high volume tells me the bears have gotten in charge (inspite of closing above the 20 MA), and that there is more downside action to continue.

I have no position and am just interested in taking part in the dialogue on GIGM.

good luck to all that have positions. 

[AussieTrader]

I decided today to take some profit on GIGM and sold 50% of my holding at $10.20. Not because I perceive weakness in the chart, just wanted to balance my port and protect profits. I have remaining currently now at $9.45 Stop loss.

I stopped out on my remaing 50%. Which is just fine for me.

I'll buy stop back in at $10.50+ (when and if the momo returns) or look for support if pullback continues which could be anywhere from $7.50 to $9.00 zone.

Good luck

[Terliso]

New to the site here and I just wanted to say how helpful your charts are Terl, the graphics are great.  I finally opened a margin account and am now able to short stocks and your knowledge and charts are helping me to learn what to look for.  Thanks for all of your insight 

Welcome to 3SOF charger...best site on the planet

[alien41]

Melf Elf,

I really liked your analogy.   Anytime you can relate stock transactions to the world of sports it can be most helpful.  It gave me something to think about as I continue to trade GIGM.

Thanks.....Alien

[Melf Elf]

Melf Elf,

I really liked your analogy.   Anytime you can relate stock transactions to the world of sports it can be most helpful.  It gave me something to think about as I continue to trade GIGM.

Thanks.....Alien

Alien,

Thanks, I appreciate that, especially since the analogy went awry when GIGM started running back and forth to both sides of the key.

 

I often thinking of the charts in terms of sports, particularly football.  Bulls and Bears.  Offense and Defense...

At the opening bell on Friday, the Bulls started off from the line of scrimmage at the 9.71 yard line, threw a pass where it was intercepted by the Bears at the 9.92 yard line...

Melf Elf jumping out of his seat in the stands...CHEERING loudly...
Bears run it back toward the goal line at 8.96, but fumble at the 9.06 yard line and don't score!!

  Melf Elf in the stands, CURSING, and covering ½ his short
Bulls take the fumble and return the ball all the way to their initial line of scrimmage, at the 9.71 yard line...

You can see that the market has turned me into a crazy elf, alien.    

[ScottishTrader]

OK,

I'm gonna throw a completely different situation into the fray and see what you guys think.  I've been in GIGM since 5.90, and quite happily rode the big rise for a substantial gain, selling half at 10.30.  Have been sitting on the other half and actually added a bit more in the high 9's last week as I thought this consolidation wuld break to the upside as ascending support came into play.  Guess I was wrong as GIGM broke down through it on Friday .  So, my cost basis at the moment is about $7, which means I am still healthily up on it for the remainder, but I don't want to see these profits get eaten away.  Long term, I'm still bullish on GIGM, and think that it could easily move up towards $15, but could well require some consolidation in this range for a month or more before its next leg up.

It seems like most of you (Melf, Elite) are short term bearish on GIGM and think it has more to give on the downside.  What I'm toying with right now is whether to get out within range here and wait for it to make up its mind (either up or down) or hang in a bit longer until I get a clear sell-side signal (i.e. a break of 8.96 support). 

Basically just curious what other slightly longer term longs are thinking here.

Scotsman 

[eliteG]

Scottish - I'm short-term powerful pop possibility bullish 

Melf - great analogy  .. if we could only get a play by play real-time, lol

[Melf Elf]

It seems like most of you (Melf, Elite) are short term bearish on GIGM and think it has more to give on the downside.  What I'm toying with right now is whether to get out within range here and wait for it to make up its mind (either up or down) or hang in a bit longer until I get a clear sell-side signal (i.e. a break of 8.96 support).

Scotsman,

What a nice postion you're in...good going!

We're closer to breaking 8.96 support than we are to taking out 10.27-10.30 resistance, so the Bears have field position here at the 9.34 close.

The Bears, however, couldn't score on Friday by taking out 8.96 support, which I didn't expect in just one day.  The Bears already scored once, by breaking the Bearish Falling Wedge.  Given how strong GIGM has been, two back-to-back scores didn't seem favored.

Scottish - I'm short-term powerful pop possibility bullish 

I'm leaning toward a short-term pop, too, for the reason just stated, because a pop is necessary if GIGM is going "morph" into a H&S Top (It needs a pop to form the Right Shoulder),and because a "Relief Rally" in the general market after Friday's reversal very well could be in the offing early this week. 

I'm going to get a feel for things tomorrow morning, but I'm probably going to cover my remaining ½ position short, and look to re-enter near 10.00, or better.

Back to your situation...

Since we're so close to the Bears' End Zone (8.96) at the 9.34 close and you didn't sell, it isn't going to cost you much to see if the Bears score, by taking out 8.96. 

Your reward for holding is the Bulls taking the ball back to Friday's opening line of scrimmage, at 9.71, or up to 10.00+ (to form a Right Shoulder), or back toward another attempt to score above 10.27-10.30 resistance.  All of that is "neutral" territory.  The Bulls don't even have to score for you to have what I would rate as a 1:1 risk/reward, and probably better.

If Bears score, you sell below 8.96, which is a loss of 4.07% from here.
if the Bulls take it to Friday morning's line of scrimmage, at 9.71, your gain is 4.07%
Risk:Reward is 1:1

If Bulls can take the ball to 10.09 (very possible for the Right Shoulder), your gain is 8%
Risk:Reward is 1:2.

If the Bulls can take the ball to 10.46 (just below the Left Shoulder), your gain is 12%.
Risk:Reward 1:3.

Your worst case is a gap down below 8.96, of course.  You can't defend against that for Monday, but you can beyond Monday.

Good luck, Scotsman, and it's good to see you!

Melf - great analogy  .. if we could only get a play by play real-time, lol

G.,

Now-w-w see what you and alien have started!?  Don't encourage me, or I'll have to start a thread called STOCKBALL.

     

Alister and Vic,

Thanks for your analyses.  Applauds.  Alister, your graphics crack me up.   

[nullzero]

covered GIGM at 8.90 avg. it sprang up to fast for me to cover at 8.50s-8.70s ;(

[Melf Elf]

Covered ½ my GIGM short at 9.15.  Gain: 10.2%

Covered remaining ½ position short at 8.54.  Gain: 16.2%

We're close to filling the 8.40 gap and GIGM has come down a lot in just a couple of days.  Covered.

[nullzero]

Nice trade melf elf, I jumped ship to early at 8.90