MIPS Technologies (MIPS)

Company. MIPS "designs industry-standard, high-performance, low-power, 32- and 64-bit RISC (reduced instruction-set computing) microprocessor architectures and cores for embedded systems." These are used in devices such as routers, laser printers, digital set-top cable boxes, video game consoles. (company website)

Buy. At the end of January, I sold off earlier lots of MIPS stock for a reasonable profit. At the time, I speculated that the sell-off had been normal "profit-taking" and expected to jump back in if conditions warranted. I thought conditions warranted, and I jumped back in two weeks later. There had been a further drop followed by a recovery or so I thought: money flow, while still negative, had stabilized (CMF), and there had been an uptick in buying pressure (green +DI line).

Oops. A few days later there was another big drop.

Sell. Last week, I thought I was out of the woods when MIPS opened quite a bit lower at $5.30 but then continued to rise throughout the day (a belt-hold bullish chart pattern). Alas, the price dropped a lot more yesterday and I decided to bail; there is now a clear pattern of "lower-lows" ($5.49, $5.38, $5.30) and corresponding "lower-highs" as well.

There are contradictory signals in the charts. On the one hand, money flow (CMF) is improving and is once again positive. On the other hand, selling-pressure (red -DI line) continues well above the buying-pressure line (green +DI line) and the ADX line shows this trend has strength. It's also clear that the 50-day moving average will soon begin to fall. With the Nasdaq upward trend having been broken, to hang on to MIPS would be to bet against the market.