DIVX

[vic666]

thanksAussie...I'll add the ATR to my arsenal. 

applauds to you for brining it to my attention.

[Ramsburg]

Nice inputs Aussie (applaud)

Update:
News: DivX, Inc. Joins Russell 3000 Index  (already posted by Aussie)

This is good news, not bombastic, but good for the company visibility among the institutionals, and it should provide some buying pressure as well.

From the technical front there are no big developments yet; DIVX was up today again but with light volume and closing below the open. The short term pattern is showing a slow reaction over the support area, all we need now is a breakout of this short term consolidation range to the upside ($27/$29), and I’m sure the volume will show up then.

Trading Plan:
Hold DIVX

Best regards,

[Ramsburg]

Update:
DIVX is having some difficulties to breakout the tight consolidating range near this support level. We'll keep on holding it for now.

Trading Plan:
Hold DIVX

Best regards,

[Ramsburg]

Update:
From a technical perspective I'm a bit apprehensive with DIVX current behaviour, the stock is stalled inside a tight trading range, testing the support level for several weeks with its momentum getting weaker. And now, DIVX is breaking the ascending support line... The stock is still trading inside the short term range, but is showing too much weakness for my eyes... 

We are holding a 40% profit on DIVX right now, it's good but already $4 below the high near $32 last month... I was expecting to see DIVX in the mid $30's at this point, not here...
I have great expectations for the company, but I must be protective at this point. So I'm selling half of DIVX position today at or near the open.

Trading Plan:
Sell Half of this Position and Hold the rest.

Best regards,

[thai626]

I'm jumping ship today on DIVX 

The action lately is just too much for me to handle.  In fact, I know I should have jumped out earlier and secured my gains but stupid me, I kept holding for a turnaround.   

[berloga]

  Doesn't it look like DIVX is forming a H&S pattern?

[Ramsburg]

I'm jumping ship today on DIVX 

The action lately is just too much for me to handle.  In fact, I know I should have jumped out earlier and secured my gains but stupid me, I kept holding for a turnaround.   

Hi thai,
Yes… DIVX is not trading as we expected, the recent weakness has triggered a short term selling signal on yesterday session (a pre signal on Monday’s session). I’m glad we sold half of this position for the Portfolio, so now we can handle the rest with less pressure.

  Doesn't it look like DIVX is forming a H&S pattern?

Hi berloga,
Yes, we can consider some kind of H&S pattern going on here…
 
Update:
DIVX continues to sell off, now trading below the ascending support line, and testing the lows of the short term trading range.
This is not looking good… but now we are just holding half of our initial position. We sold that half due to short term caution and profit management, so that we can now give a little more room to this trade with less pressure.

DIVX price behaviour has been quite volatile during its short history, we’ve watched some significant sells before followed by unexpected (technically speaking) recoveries. I’m not sure what’s going on, neither the reasons of this sell off. Since its IPO, DIVX is up big time, and this alone could be a reasonable explanation, other reason could be more speculative, and related with the expectations of the company issuing more shares (which is common after a successful IPO like this one).

I still believe that the DIVX codec will be the global standard, that the licensing revenues will sky rocket, and that the company could be the target of an acquisition…
Either way, being wrong or right the market can be unpredictable, so I’m setting a stop for the remaining half position, and will wait.

Trading Plan:
Hold DIVX with a stop @ $24.90
3SOF is holding just half of the initial position (sold half @ $27.50)

Best regards,

[basonista]

It could just be that DIVX is waiting for the 50ma to catch up.  You can see that the last big move was made right before the 50ma showed up on the chart and we have had sideways price action ever since.  Price is staying above the 38.2 fib level of this entire move so no real breakdown has occurred yet.  Both this fib level and the 50ma are coming in pretty close to each other.

[anvilring]

I'm with Rams.... even though I sold several days ago, (and I readily admit, for no other reason than a hunch! ) This is one super story/company I want to continue owning. Theres several reasons for this decline as have already been stated and I'll throw in one from the film " Shakespeare in Love".... 

                                                      "its a mystery!"

In any event, there codec is the horse to bet on and after this mad Christmas rush to buy/use all things electronic, demand for their product could start its accent post haste. As people buy more Divix enabled product and find they like it, demand, as with all things computer related, multiplies exponentially.

[tokyopua]

I am watching Cramer do a special segment on DIVX. 
-Says 4 buys and 1 hold from the analysts, so not much upgrade potential. 
-Insider lockup not expireing till March 22nd, keeps some investors out till then, 44.8% of the company owned by insiders, they will want to take some off the table. 
-POssibility of a secondary, would crater the stock... 
-Hard to estimate size of its market...
-Real Networks, Apple, Sony, are potential competitors, but has Google as a partner...
-Trades at 17.4 times sales (not earnings) is sky high...

So, he is saying sell.  This after last week saying it is the next Akamai, lol.  But now the chart is saying the same thing, what to do, what to do...

[Ramsburg]

It could just be that DIVX is waiting for the 50ma to catch up.  You can see that the last big move was made right before the 50ma showed up on the chart and we have had sideways price action ever since.  Price is staying above the 38.2 fib level of this entire move so no real breakdown has occurred yet.  Both this fib level and the 50ma are coming in pretty close to each other.

Hi Basonista
I‘m also looking to the ema50 as a potential support… The ascending channel is broken, but this only means that the pattern stopped working, it doesn’t necessary means that DIVX must continue to sell off.

I'm with Rams.... even though I sold several days ago, (and I readily admit, for no other reason than a hunch! ) This is one super story/company I want to continue owning. Theres several reasons for this decline as have already been stated and I'll throw in one from the film " Shakespeare in Love".... 

                                                      "its a mystery!" 

Wherever there is a stock full of traders with profits on their pockets there is no mysteries for a sell off The problem right now is what to expect from here, since there are a few questions on the air (will it be insider selling, a secondary offer, etc?).

I am watching Cramer do a special segment on DIVX. 
-Says 4 buys and 1 hold from the analysts, so not much upgrade potential. 
-Insider lockup not expireing till March 22nd, keeps some investors out till then, 44.8% of the company owned by insiders, they will want to take some off the table. 
-POssibility of a secondary, would crater the stock... 
-Hard to estimate size of its market...
-Real Networks, Apple, Sony, are potential competitors, but has Google as a partner...
-Trades at 17.4 times sales (not earnings) is sky high...

So, he is saying sell.  This after last week saying it is the next Akamai, lol.  But now the chart is saying the same thing, what to do, what to do...

Thanks Toky
Cramer loves to shake DIVX with his comments, but he has a point with some of these topics even if he his not being much coherent with his own opinion. I mean, I agree with the concerns of a secondary offer (I already mentioned on yesterday’s update) and the Insider lockup till March, but about the 17.4 times sales and the competitors concerns… come on … Hard to estimate the size of its market? Isn’t that great ? a market so huge that is difficult to estimate its size

Update:
Cramer has talked about DIVX once again, here is the transcript from Mad Money Recap:

Don't Dive Into DivX
DivX is the "hottest of the hot," Cramer told viewers. The company went public on Sept. 22, and Cramer told viewers to get in on Sept. 26. The stock has been up 52% since Cramer's recommendation.

DivX makes software that compresses digital video and licenses it to companies. It has a deal with Google  and is moving into Eastern Europe and India.
The company makes the majority of its money by selling its product at a much higher price than it costs to make.
DivX is starting to get coverage by analysts and right now has four buys and one hold, giving it limited upgrade potential, Cramer said.
Moreover, the fact that its share-lockup doesn't expire until March 22 is good and bad, he said. It's good because there won't be an insider selloff until March, but it's bad because investors will be waiting for the selloff before they get into the stock.
What's more, there is a strong possibility of a secondary offering, which could crater the stock, he said.
Although it's been profitable for the past two years, that doesn't mean it deserves to go higher, Cramer said.
"I don't want you in DivX for the next few months," he said, adding that there's a good reason to be conservative. Cramer likes it a lot cheaper.

We share some of Cramer's concerns… and that’s why we already sold half of our position… In the other hand, we still have great expectations about the company prospects and its business concept, and that’s why we are not selling the other half right now, even if the technicals are not so good right now.
DIVX has a support near $26.75, its ema50 is located near $26.35, and our current stop price for the remaining position is $24.90, giving some room to this trade. We’re waiting…

Trading Plan:
Hold DIVX with a stop @ $24.90
3SOF is holding just half of the initial position (sold half @ $27.50)

Best regards,

[422fwhp]

Not sure why it's down in pm

[dwest718]

Here's why:

http://www.thestreet.com/_yahoo/funds/madmoneywrap/10329081_2.html

Don't Dive Into DivX
DivX is the "hottest of the hot," Cramer told viewers. The company went public on Sept. 22, and Cramer told viewers to get in on Sept. 26. The stock has been up 52% since Cramer's recommendation.

DivX makes software that compresses digital video and licenses it to companies. It has a deal with Google and is moving into Eastern Europe and India. The company makes the majority of its money by selling its product at a much higher price than it costs to make.

DivX is starting to get coverage by analysts and right now has four buys and one hold, giving it limited upgrade potential, Cramer said.

Moreover, the fact that its share-lockup doesn't expire until March 22 is good and bad, he said. It's good because there won't be an insider selloff until March, but it's bad because investors will be waiting for the selloff before they get into the stock.

What's more, there is a strong possibility of a secondary offering, which could crater the stock, he said.

Although it's been profitable for the past two years, that doesn't mean it deserves to go higher, Cramer said.

"I don't want you in DivX for the next few months," he said, adding that there's a good reason to be conservative. Cramer likes it a lot cheaper.




Cramer said DIVX has limited upgrade potential and is overvalued.  Also, he says that there's a strong chance there will be a 2nd offering of stock that will greatly dilute the price.  Perfect time to come out with this since DIVX looked like it had the potential to run after yesterday's gap up and positive day on a neutral/negative market day. 

[njshiva]

I sold 2/3rd of divx around 29 and moved  into goam and bfly. bfly is going down too but not as much.  Selling the remaining today. I think technically the chart is damaged. 

[Ramsburg]

Update:
As expected, Cramer’s words had a significant effect on DIVX share price…
DIVX is now trading below the $26.50 support and the ema50, volume increased and the overall technical picture is now a bit ugly.

Personally, I’m not expecting to watch DIVX going much below its current level, we’ve sold half of this position 2 days ago, and we’ll stay with the stop @ $24.90 for the remaining half.

Trading Plan:
Hold DIVX with a stop @ $24.90
3SOF is holding just half of the initial position (sold half @ $27.50)

Best regards,