ECI Telecom Ltd (ECIL)

Company

" ECI Telecom Ltd. is a global provider of advanced telecommunications solutions to leading carriers and service providers. By translating a deep understanding of our customers' needs into innovative, technologically excellent solutions, we enable our customers to increase the value of their networks and reduce operating expenses." (company website)

Buy

20-May-05. ECIL has just reversed a downtrend that began late in 2004 (see sidebar). It has broken past the previous peak of $8 and is poised to either consolidate at $8 or push beyond $8.50 (I'm rooting for the latter).

• Price momentum (PPO) — increasing smartly
• Trend (ADX) — marked strengthening, and buying pressure (+DI) is widening the gap above selling pressure (-DI)
• Money flow (CMF) — has gone from moderately negative to strong positive
• Relative strength (RSI) — increasing steadily this month

Because ECIL has surged so far so quickly, a pull-back would not be unexpected. On the other hand, if it breaks past the previous high, as it seems likely to do, it may break out. I'm hedged my bet by buying only half a lot.

Sell

6-Jun-05. Friday's down-day was a bit discouraging, and when ECIL gapped lower to open today, I decided to bail out with a modest profit in case there is a deeper pullback. There are signs of weakness in the chart: relative strength (RSI) pointing down; falling daily volumes; drop in buying pressure (+DI); rise in selling pressure (-DI).