Micromuse (MUSE)

Company

"Micromuse delivers industry-leading business and service assurance solutions to organizations worldwide. During the 14 years since our company's inception, our flagship Netcool brand has become synonymous with scalable, realtime, end-to-end management of complex IT and telecommunications infrastructures. Our comprehensive range of Netcool solutions enable service providers, equipment providers, corporate enterprises, and government agencies to extract maximum value from their mission-critical applications, systems, and networks." (company website)

Buy

27-Dec-04. Micromuse has been climbing steadily since the low at the end of September. It has gotten high enough to cause the 200-day moving average to level off, and — if the pattern continues — the 50-day moving average will cross over soon. As a result of the last week's trading, MUSE has becoming over-sold, and I am counting on the end-of-the-year rally to push it upward.

Sell

1-Mar-05. It was a nice thought, but it wasn't a very smart one. MUSE did rise for three days after I bought it, but with the turn of the year, it began a long descent into nowheresville. On the first two trading days of the new year MUSE broke below the 200-day moving average and then the 50-day moving average and the lower Bollinger band. The smart thing would be to have cut my losses at that point. But I didn't do the smart thing.

It's not that there weren't signs: there was falling price momentum (PPO), weakening trend strength (ADX), weakening relative strength (RSI), negative money flow (CMF), and an extended time in oversold condition (StochRSI).

Until just recently I could look at the long-term chart (see sidebar) and imagine a rising support line from September to February. But MUSE has now broken below that line, so I am going to take my loss and lick my wounds.