Centennial Wireless (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 approximately 1.1 million wireless subscribers and 582,200 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

Sell short

19-Aug-08. I had been holding a long position in CYCL, but when I revised my trading strategy, I realized I should have sold short. So, I sold the long positiin and opened this short position.

CYCL got a boost when it reported earnings above expectations, but that didn't last long. The price has started to fall again, leaving the long-term downtrend, begun in November 2007, intact.

  • Price momentum (PPO) — PPO line has just crossed below the signal line and is starting to diverge

Based on technical analysis, MarketEdge calls CYCL a "neutral from avoid" in a "weak downward trend" and notes "mildly improving conditions."

I obviously don't see it that way. I wonder if MarketEdge has built their system on a different time horizon than I think with. Hmmm.

Buy to cover

gain Bottom line
-8%

9-Sep-08. Well, as a test of my new strategy, this didn't work out. According to my theory, CYCL should have continued to fall — it rose. It may be that in addition to the PPO line I have to pay more attention to the averages; in this case, CYCL had recently moved above the 50-day moving average, which was rising. It was also above the 200-day moving average, although it is still falling. Also, the nice positive earnings surprise should have been a clue.

Putting those things together, what you get is a perhaps marginal candidate that should have been eliminated from the pool. CYCL is close to the resistance trend line, so it made more sense to close the position than risk extending the loss.