Harmonic Inc (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)

Sell short

7-Jul-06. Harmonic went into free-fall after peaking in March. It looks like it might have bottomed and be on the way back up, except that there are signs in the chart that it is about to run out of steam.

• Price momentum (PPO) — surged after hitting bottom but leveling off
• Trend (ADX) — buying pressure (+DI) failed to stay above selling pressure (-DI) which appears to be headed up
• Money flow (CMF) — improving, but the pace is slowing
• Relative strength (RSI) — still neutral, but tipped down
• Volume — falling steadily

Buy to cover

25-Jul-06. I covered my short position in HLIT today when a stop-loss order triggered at $4.25. That price was the upper limit of the resistance range, just above the 1-month moving average and just below the 50-day moving average. It could be that HLIT was just touching up with the averages before falling again, but I was nervous about hanging on beyond that point because HLIT has been gathering strength (RSI) over the past month. Rather than risk losing all my gains, I decided to lock in small profits.