Bottomline Technologies (EPAY)

Company

"Bottomline Technologies provides payments and invoice automation software and services to organizations seeking more secure and efficient financial processes. The company remains at the forefront of delivering innovative solutions that complement and extend the value of existing financial processes, business relationships and back-office systems. The company’s solutions enable industry-leading banks, financial institutions and corporations to automate, manage and control processes involving payments and collections, invoice approval, cash flow, risk mitigation, reporting and document archive." (company website)

Buy

23-Aug-06. Bottomline has been in a steep downtrend for most of the past year (see sidebar). Nevertheless, I have thrown caution to the wind and jumped in. The chart is improving strongly, and support is at $8.73, according to MarketEdge. Even if this is only a short-term uptrend in a longer-term downtrend, EPAY has quite a ways to go before getting to a test of the trendline. In short, there is room to make a bit of money before it tests resistance and goes back down, if it goes down.

• Price momentum (PPO) — picking up sharply
• Trend (ADX) — well above the threshhold (20) and buying pressure (+DI) has crossed above selling pressure (-DI)
• Money flow (CMF) — flowing into the stock after a long period of outflow
• Relative strength (RSI) — strengthening nicely in past month
• Volume — moved off the low with higher-than-normal volume

Sell

30-Aug-06. EPAY has been climbing steadily and sharply for over a month. After a big gain yesterday, it opened higher again today and stayed above $10 most of the day. But as the session drew to a close, it began to fall. Since the stock is over-bought, I decided to put a stop-loss order in to trigger if EPAY traded below $10. At some point soon it is bound to regress back toward the averages, and I didn't want to see my gains slip away. Wouldn't you know, EPAY did sink below $10, but only long enough to trigger my order. It then jumped right back up again. Oh well, 12% ain't half bad!