Cirrus Logic (CRUS)

Company

Cirrus Logic is "a premier supplier of high-performance analog, digital signal processing (DSP) and mixed-signal chip solutions for consumer electronics that allow people to Experience Extreme Entertainment™." (company website)

Buy

17-Nov-04. Cirrus turned up in a screen for stocks in a bullish breakout with big volumes. CRUS was trading in a band between $4.75 and $5.25 until a week and a half ago when it broke above $5.25. Looking at the 1-year chart (see sidebar) that trough should have been the bottom.

10-Dec-04. Cirrus gapped lower to open, but proceeded to climb after that. I decided that the last three days of selling had taken care of most of the profit-taking and CRUS would soon be back on the rise. The over-sold condition (StochRSI) is mostly relieved.

Sell

9-Dec-04. When CRUS started to fall earlier in the week, I put in a stop-loss order to sell at $5.90 if the price fell to $5.91. Unfortunately, CRUS dropped so fast that the sell order did not execute until a spike in yesterday's trading. Only part of my lot sold. Since CRUS ended the day not much below my original purchase price I decided to just hold onto the remaining shares. This morning I decided to buy back in with another full lot (see above).

22-Feb-04. Right after I jumped back in, Cirrus lowered their guidance, and that's when the s* hit the fan. What looked like a recovery turned quickly into a collapse (see sidebar). Toward the end of January it started to look like CRUS had reached a new bottom and light began shining at the end of the tunnel. That lasted less than two weeks.

The situation with CRUS is looking very dismal. Both the 50- and 200-day moving averages have turned sharply down. Price momentum (PPO) is falling and about to become negative. Buying pressure (+DI) continues to fall. Relative strength (RSI) is falling, and CRUS has become oversold again (StochRSI). Thus, I pulled the plug at a loss of $1 per share.