Integrated Silicon Solution (ISSI)

Company

"ISSI is a fabless semiconductor company that designs and markets high performance integrated circuits for the following key markets: (i) digital consumer electronics, (ii) networking, (iii) mobile communications, (iv) automotive electronics, (v) industrial. The Company's primary products are high speed and low power SRAM and low and medium density DRAM. Through its Giantec business unit, the Company also designs and markets EEPROM, SmartCards and analog power management devices focused on its key markets. ISSI is headquartered in Silicon Valley with worldwide offices in Taiwan, China, Europe, Hong Kong, India, Korea, Singapore, and Japan." (company website)

issi(1-1)
ISSI 4-month chart
issi(1-1)_1yr
ISSI 1-year chart

Sell short

9 March 2010. Sold short 500 at $8.29.

ISSI soared, with volume, after reporting earnings at the end of January, but it fell last week out of the channel. I am interpreting this to mean that it is about to regress toward the 50-day moving average before advancing farther.

  • Percentage price oscillator (PPO) — below the signal line and diverging
  • Volume — recent surge accompanied by volume

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

One of us is wrong.

Buy to cover

gain Bottom line
6%

17 March 2010. Buy to cover 500 at $7.82.

I was right before I was wrong. ISSI did fall in price, and at one point traded as low as $7.28, but it bounced back today with a vengeance. Fortunately my stop-loss order kicked in and preserved some of the gain.

A tricky part of selling-short is timing the cover — in the case of ISSI (and SMOD) it rebounded quickly once it turned. The problem is, how to adjust the stop to protect against that without being prematurely booted out of the position.