Centennial Communications (CYCL)

Company

CYCL 1-year chart CYCL 1-year chart

"Centennial Communications, based in Wall, NJ, is a leading provider of regional wireless and integrated communications services in the United States and Puerto Rico with over 1.1 million wireless subscribers and 474,500 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe is a significant shareholder of Centennial." (company website)

CYCL 6-month chart
CYCL 6-month chart

Buy

22-May-08. Centennial fell into a steep downtrend in 2008, bottoming in early March just above $4. Since then it has risen sharply and steadily. The chart formed a symmetrical triangle and broke above it at the beginning of May.

  • Price momentum (PPO) — rose sharply, but has leveled off somewhat
  • Relative strength (RSI) — strong, again near 70
  • Trend (ADX) — very strong; slight decline in buying pressure (+DI) has not been matched by a corresponding rise in selling pressure (-DI)
  • Volume — has declined gradually since January

Based on technical analysis, MarketEdge calls CYCL a "strong buy" in a "strong upward trend."

Sell

gain Bottom line
10%

1-Aug-08. I closed this position in CYCL today, opting to take profits.

CYCL downtrend

When you look at the 1-year chart, and depending on exactly where you choose to draw the line, CYCL is either (1) still in a long-term downtrend or (2) breaking out of a long-term downtrend. MarketEdge still recommends "avoid" on the stock and advises those who are short to hold short; they obviously see the chart as a continuing long-term downtrend.

I'm a little uneasy about closing the position — the sting of having closed IKN prematurely is still fresh (since I closed, IKN has risen another 11%). On the other hand, if the current rally is about to collapse, takiing profits is good. In the current volatile market, the fact that CYCL beat earnings Expectations can't be counted on, IMHO.