Ditech Networks (DITC)

Company

"Ditech Networks produces equipment for global communications networks, serving the needs of mobile and wireline operators using circuit and packet technologies. Ditech’s voice enhancement and echo cancellation products enable telecommunications providers to deliver consistently clear voice to their customers worldwide. Our VoIP products combine packet processing and session control to deliver dependable end-to-end VoIP services across network security boundaries without network re-architecting." (company website)

Sell short

2-Aug-06. Ditech has been in a steep slide since peaking in May. It is still a ways from its 52-week low, so I'm predicting it will go lower.

• Price momentum (PPO) — what momentum? Below neutral and slowing down.
• Trend (ADX) — strong trend, with selling pressure (-DI) well above buying pressure (+DI)
• Money flow (CMF) — flowing out of the stock
• Relative strength (RSI) — weak
• Volume — declining steadily

Sell

15-Aug-06. For no apparent reason. DITC showed signs of life at the end of last week with two consecutive up-days on high volume that brought it above the trend line. But since it was overbought, I held on, thinking that it could have been just a burst of enthusiasm before sinking again. When it broke through the upper Bollinger band and the 50-day moving average yesterday I thought the same thing, but with a lot less confidence. This morning DITC opened up again. Obviously, DITC would not be the stock on which I would make my fortune. Time to cover.

DITC reports earnings this week, but I have seen no news that would explain the sudden change in sentiment. I must confess that whenever I see this happen I always suspect that somebody "knows something" and word has made its way to a select group of big investors. It can happen — after all, this is why Martha Stewart went to jail.