Applied Digital Solutions (ADSX)

Company

"Applied Digital develops innovative security products for consumer, commercial, and government sectors worldwide. Our unique, and often proprietary, products provide security for people, animals, the food supply, government / military arena, and high-value commercial assets. Included in the diversified product line are RFID applications, end-to-end food safety systems, GPS/Satellite communications, and telecomm and security infrastructure, positioning Applied Digital as the leader of Security Through Innovation™." (company website)

Buy

9-Dec-04. ADSX has jumped on three days of increasing volume. After some profit taking yesterday, it appears (knock wood) to be moving up again today.

The trend is strong and has been strong for two months (black ADX line). Relative strength (RSI) has remained high as well. Although it has been over-bought (StochRSI), remedied by yesterday's profit-taking.

My concern about ADSX is that I may be late to the party. It is up 350% since the beginning of October (see sidebar). I would be surprised if this continues much longer. Memo to self: Enter stop-loss order.

Sell

14-Jan-05. Not surprisingly, ADSX pulled back to the 1-month average (dashed line) right after I bought it. However, it recovered nicely and kept following that average back up. Unfortunately, at the beginning of January it bumped up against the upper Bollinger band and then began to retreat. I kept holding it because it was still nicely above the 50-day moving average, and when it touched up there yesterday it could as easily have bounced back today. That didn't happen. It broke decisively through the average and through the lower Bollinger band. With relative strength falling (RSI) and the stock completely over-sold (StochRSI) and with selling pressure (red -DI line) crossing above buying pressure (green +DI line), this could get much worse before it gets better.

Shoulda put in the stop-loss order!