Redback Networks (RBAK)

Company

"Redback Networks Inc., a leading provider of next-generation broadband networking equipment, enables carriers and service providers to build third-generation Smart Broadband Networks that can deliver simplified, personalized, portable subscriber services to consumers and businesses. The company's carrier-class, consumer-scale SmartEdge Router and Service Gateway platforms for Consumer IP combine subscriber management systems and edge routing and, in conjunction with the NetOp™ Element and Policy Manager platform, provide a powerful, flexible infrastructure for managing both subscribers and value-added services." (company website)

Sell short

26-Apr-05. I made some money on Redback a while back when it was going up; I sold short today in expectation of making more money while it's going down.

RBAK has tested the 50-day moving average twice in the last two weeks and failed both times. Yesterday it broke below the lower Bollinger band again, so I put in order to sell short that would trigger today if RBAK fell below yesterday's close. It did; the order executed.

Average daily trading volume has been declining for the past two months. Price momentum (PPO) has fallen steadily during that same time period. There has been another big uptick in selling pressure (-DI) and money appears to be flowing out of RBAK again (CMF). All this should point to further decline in RBAK price.

Buy to cover

9-May-05. Well, this was a good idea that didn't work out very well. Last week, relative strength (RSI) and price momentum (PPO) picked up. For most of today it looked like it would fizzle out again, but by the end of the session RBAK began to trade higher with decent volumes.

Interestingly enough, the reversal of the downtrend took place at the minor peak set in December (see sidebar). I can see I have to pay more attention to the long-range charts to look for both major and minor support/resistance levels.