Conexant (CNXT)

Company. Conexant is "a worldwide leader in semiconductor solutions for broadband communications, enterprise networks and the digital home. Conexant's merger with GlobespanVirata in February 2004 created an industry powerhouse that enables the seamless delivery of broadband information between public access networks and the homes and businesses they serve." (company website)

Buy. I acquired these shares of Conexant when it acquired GlobespanVirata in an all-stock merger effective 1-Mar-04.

This was actually the second lot of GSPN shares that I had purchased. The first lot went into the tank and I bought this second lot when the price started trending back up. Although it's not a good practice to average the price down, I did it. And it worked, at least this once. After the merger, the first lot turned a very small profit, and this second lot was looking very good.

Sell. The market has been completely squirrely for the past two months — up one day, down the next, for no apparent reason. Although CNXT is on the analysts' "buy" lists, the chip sector is being punished severely and by this morning the price of CNXT had dropped to $7. I decided to take the profits before they were further eroded. As my mama used to say, "Make hay while the sun shines."

This is the second consecutive down-day, the directional indicators are moving in the wrong direction (rising -DI line, selling pressure, and falling +DI line, buying pressure), and money flow is falling (Chaikin Money Flow, CMF).