Verilink (VRLK)

Company. Verilink "provides intelligent WAN access solutions allowing network service providers to connect their enterprise customers over broadband access services such as T1, E1, DDS, T3, ISDN and G.shdsl." (company website)

VRLK stock chart
gain Bottom line
23%

Buy. I bought Verilink the day after it broke the $5 barrier in a decisive one-day jump from $4 to $5.50. The day before, VRLK reported earnings of 10¢ per share compared to 2¢ for the same quarter the year before. The volume was huge, and the trend strength (ADX line) was very strong. I reasoned that even if it pulled back a bit, it was likely that it would resume its climb.

Sell. Verilink got as high as $7 before stalling out. I decided to sell today when the price fell, even though the Nasdaq was up. My caution is due to several considerations:

  • The rise from $4 to $7 had been a gain of 75% in less than a month; that is unlikely to be sustained
  • At the current price, VRLK is still $4 above the 200-day moving average
  • VRLK volume in the past days has been miniscule (less than 15,000 shares so far today)
  • The +DI line (buying pressure) is falling, as is the trend strength line (ADX line)

In short, it's probably best not to be too greedy.