Linktone (LTON)

Company

"Linktone Ltd. (Linktone), incorporated in November 1999, provides entertainment-oriented wireless value-added services to mobile phone users in China. The Company specializes in the development, aggregation, marketing and distribution of consumer wireless content and applications for access by China's mobile phone users through two mobile network operators, China Mobile and China Unicom." (Reuters profile) (company website) (Note: in Chinese)

Buy

30-Oct-06. Linktone has been in a long downtrend and has just broken through the trend line (see sidebar).

Price momentum (PPO) — increased over past three months, picking up again after slowing during pullback
Trend (ADX) — turning up after long decline, with buying pressure (+DI) crossing above selling pressure (-DI)
Money flow (CMF) — now flowing in; was outflow
Relative strength (RSI) — strong, but may be over-bought (StochRSI)
Volume — declining slightly but above-normal volume as price bounced off 50-day moving average

Sell

Bottom line
4%

17-Nov-06. I just don't get it. The market reaction to a company's earnings report is almost completely unpredictable, at least by me. It was obvious from yesterday's sell-off that LTON was in trouble, but I saw no news that might have triggered it. Just two days before, LTON had jumped back above the 200-day moving average on heavy volume. Perhaps people were taking profit before earnings, today, before-the-bell. I don't know.

The Expectation was that LTON would earn $.02 per share. They reported earnings of $0.04 per share ($0.05 on an adjusted basis). Down from the previous year, true, but better than Expectations. I thought the stock might even go back up today. Wrong!

The trailing stop, lifted to $5.64 when LTON hit $6.41, triggered a sell order, leaving me with a small profit. The uptrend (see sidebar) seems intact, however. Should I have ridden it out? Should I jump back in again? I'm so confused!

LTON closed the day at $6.24, up 33¢. <expletive!>

Hewlett-Packard (HPQ), of which I still hold a bundle of shares as a result of the employee stock purchase plan, suffered a similar fate. After the bell yesterday, they reported earnings that blew past all expectations. This morning HPQ traded down over $1 from yesterday's close. Go figure.