PMC-Sierra (PMCS)

Company

"PMC-Sierra™ is a leading provider of broadband communications and storage semiconductors for metro, access, fiber to the home, wireless infrastructure, storage, laser printers and customer premises equipment. PMC-Sierra offers worldwide technical and sales support, including a network of offices throughout North America, Europe, Israel and Asia." (company website)

Buy

18-Oct-06. PMCS fell sharply earlier this year, but now appears to have broken the downtrend (see sidebar). The stock took a hit in later September when the company lowered its earnings forecast, but broke above $6 with four consecutive up-days with good volume after two weeks of consolidation at $6. I put in a limit order to buy at $6.40. The order finally executed today. However, earnings are due to be reported tomorrow, and that is always cause for concern. It will probably prod PMCS to break out of the sidewise channel, but there's no telling which direction.

• Price momentum (PPO) — had been picking up
• Trend (ADX) — weakening stopped when buying pressure (+DI) crossed above selling pressure (-DI)
• Money flow (CMF) — long-term improvement, but now around neutral line
• Relative strength (RSI) — picked up sharply last week
• Volume — average has been fairly constant for past three months, and the price jump was with higher volume

Sell

17-Nov-02. Although PMCS is a long way from my sell-stop, I sold anyway. It has stopped stretching out the upper Bollinger band and momentum (PPO) seems to be leveling off. Trend strength (ADX) is still rising, but buying pressure (+DI) has dipped down. Relative strength (RSI) has topped out at 70, and the stochastic RSI is pointed down.

The uptrend looks intact to me (see sidebar), so I will keep PMCS on my list of "prospects" to buy again after the pullback that I think is coming.

It was time to take some profits.