Tivo

TIVO

Company. Tivo "created a brand new category of products with the development of the first digital video recorder (DVR). Today, the Company continues to revolutionize the way consumers watch and access home entertainment by making the TiVo® DVR the focal point of the digital living room, a center for sharing and experiencing television, music, photos and other content. TiVo connects consumers to the digital entertainment they want, where and when they want it." (company website)

Buy. After declining steadily since February when TIVO was over $12, it appears to have bottomed at about $4 in August (see sidebar). Since then TIVO has risen to above $6 again with two break-out days with big volume.

The trend is strengthening (rising ADX line). Money flow has turned positive (CMF). The 1-month moving average has reversed and is now moving upward again. The 50-day moving average is leveling off with TIVO's price in the second week above the average. The signs look good.

I expect a period of consolidation at this new price level. With perfect hindsight, it's clear I should have jumped in two weeks ago after the first breakout. But at that time, the 50-day moving average was still moving downward and I chickened out. It's possible I should have waited a bit longer before jumping in, but I'm encouraged by the fact that there has been so little price change after the big price jump last Friday. It's also possible that I've missed my chance entirely. Time will tell.

Sell. TiVo's rise has apparently stalled out. The new high two days ago came on a day when the stock closed lower than it opened, seldom a good sign. Further, buying pressure is falling (the falling green +DI line). Although the 50-day moving average has begun to move upward, I decided to take modest profits while they are available.

Given the historical pattern for stock market activity in October (see sidebar) and the weakening in TIVO, it seemed prudent to bet with history and statistics.