Harmonic (HLIT)

Company

"Harmonic Inc. is a leading provider of digital video, broadband optical networking and IP delivery systems to cable, satellite, telecom and broadcast network operators. Harmonic's open standards-based solutions for the headend through the last mile enable customers to develop new revenue sources and a competitive advantage by offering powerful interactive video, voice and data services such as video-on-demand, high definition digital television, telephony and Internet access." (company website)

Buy

7-Apr-06. In late March Harmonic jumped and reached almost $7 before pulling back to consolidate. I sold off earlier lots, fearing that the pullback would be deep. I was apparently wrong about that, for HLIT looks ready to advance again.

• Price momentum (PPO) — picking up slightly after leveling off
• Trend (ADX) — rapidly strengthening
• Money flow (CMF) — negative, but I've noticed this often happens with stocks that are surging (Note to self: What's up with that?)
• Relative strength (RSI) — weakened slightly but is strengthening again, and the more-sensitive stochastic is pointed up again without going all the way to oversold
• Volume — a million shares change hands most days, fairly stable

Sell

3-May-06. On April 27, Harmonic reported a loss of $0.07 per share compared to earnings of $0.02 per share for the year-ago period. Ouch! When the market opened the next day it was a bloodbath, with 6 million shares changing hands (more than 3x average). In the following session there was a lot of up and down, ending just slightly above the open. Hmmm, methinks, an over-reaction bounce might soften the loss. It was not to be. Today simply drove more nails in the coffin. Having failed to hold at the 200-day moving average for the third day in a row, HLIT went south with a vengeance. Sell!