EXFO (EXFO)

Company

"EXFO is a recognized test and measurement expert in the global telecommunications industry. The Telecom Division, which represents the majority of the company's business, offers a full suite of test solutions and monitoring systems to network service providers, cable TV operators, telecom system vendors and component manufacturers in approximately 70 countries. EXFO is the global market leader for portable optical test solutions and a leading supplier of protocol and access test solutions to enable triple-play deployments and converged IP networking. Its PC/Windows-based FTB-200, FTB-400 and IQS-500 test platforms host a wide range of modular test solutions across optical, physical, data and network layers, while maximizing technology reuse across several market segments. The Life Sciences and Industrial Division, which leverages several core telecom technologies, offers value-added solutions in the life sciences and high-precision assembly sectors based on advanced spot-curing, fluorescence microscopy and nanopositioning solutions." (company website)

Sell short

3-Jul-06. EXFO peaked in May but has been falling sharply ever since. The 50-day moving average is falling and is now trading around the 200-day moving average.

• Price momentum (PPO) — leveling off
• Trend (ADX) — selling pressure (-DI) is above buying pressure (+DI) and trend is stable
• Money flow (CMF) — flowing out of the stock, although improving slightly
• Relative strength (RSI) — weak
• Volume — falling slightly

Buy to cover

14-Jul-06. When the market opened this morning, EXFO shot up more than 2% for no apparent reason. I decided to take my profit while I still had it.

It may very well turn out that I covered prematurely, but with so much volatility in the market these days, I think it is a more prudent strategy to take small gains rather than hold out for the possibility of larger ones.