Secure Computing (SCUR)

Company

"Secure Computing, a leading enterprise gateway security company, delivers a comprehensive set of best-of-breed solutions that help customers protect their critical Web, email and network assets. Uniquely qualified to be the global gateway security provider to organizations of all sizes, our more than 18,000 global customers in 106 countries, supported by a worldwide network of more than 1800 partners, include the majority of the Dow Jones Global 50 Titans and more than half of the Fortune 50 and Fortune 500. Secure Computing delivers proactive, integrated security solutions to some of the most prominent organizations in financial services, healthcare, telecommunications, manufacturing, public utilities, education and national and local governments. The company is headquartered in San Jose, Calif., and has offices worldwide." (company website)

Buy

27-Sep-06. Stock of Secure Computing went into a steep downtrend beginning in February, that lasted until July, when the earnings report apparently helped it turn the corner. It has clearly broken through the trend line (see sidebar).

• Price momentum (PPO) — picked up after earnings, but has leveled off
• Trend (ADX) — no strong trend, with buying pressure (+DI) struggling to stay above selling pressure (-DI)
• Money flow (CMF) — greatly improved, and money is now flowing into the stock— just
• Relative strength (RSI) — slow but steady strengthening over past three months
• Volume — constant volume

This is clearly an "early buy" with an expectation that the trend up will strengthen. I suspect that the earnings report (which should be near the end of October) will be decisive.

Sell

29-Sep-06. Well! Deutsche Bank surely rained on my parade! This morning they cut SCUR to "hold" and the stock immediately took a hit big enough to trigger my stop-loss order (set at 10%). This is the downside to using stop-loss orders: unless you set the activation price a long way from the current trading price, you often get stopped out by an outlying trade, especially in the early hours of the session after company news. I've never figured out a solution for this damned-if-you-do damned-if-you-don't dilemma.

This was an "early buy" that just didn't work out.