Harmonic (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)

Buy

2-Oct-06. Harmonic has been on the "buy" list for quite a while; it has rocketed upward ever since reporting earnings in July (see sidebar). Last week HLIT hit another new 52-week high. When it first started moving up, it was "over-bought" and I put off buying, waiting for a pull-back; it never happened. This morning it traded low enough to trigger my buy order. MarketEdge has support at $7.31, and I bought at $7.25 at what is, so far, the low of the day.

• Price momentum (PPO) — sharply increased, and although it has slowed a bit, it is still picking up strongly
• Trend (ADX) — extremely strong trend, although there is a slight dip in buying pressure (+DI) and increase in selling pressure (-DI)
• Money flow (CMF) — still flowing into the stock, although at a slower rate
• Relative strength (RSI) — very strong
• Volume — last two price jumps have been on three-times normal volume

Looking at the chart, one would think that HLIT is due for a deep retracement — It is up more than 60% since starting its move. I have set my stop-loss at 10%, that would bring it all the way back to the lower Bollinger band. This is going to be very interesting....

Sell

25-Oct-06. When HLIT hit a new 52-week high of $7.75, it lifted my trailing stop-loss activation price to $7.01. With earnings due out after the close, today's up-and-down session was all over the place, and the order was triggered.

After the bell

HLIT reported earnings of $0.05 per share, a penny above Expectations, with improved margins. In the first half-hour of after-hours trading, HLIT has been as high as $7.73. Damn! Just guessing that the price will go up tomorrow.