in his book "24 essential lessons for investment success", o'neil, in chapter 11, describes the perfect cup and handle.
he describes precise parameters to look for in a break out cup and handle formation. he describes the wedging up prior to the cup formation...the cup formation...and the handle formation, and the exact detail to look for in the handle.
somewhere in the book (i looked but could readily locate the page.), i believe o'neil explains that 12-16 weeks is the proper time for this formation to develop. he even describes the significance to the reduced volume...you can view all of this on the chart link.
ssti meets all of them but one. it now needs to get over the highest point of the handle which is 34 7/8 set on 29 august...in other words 35 is the breakout...statistically, in the absence of news, one should wait for the breakout point....because most cup and handle formations, even perfect ones fail. the only way i know to reasonably predict success is when the breakout actually happens.
siliconinvestor.com
if one went strictly by TA...the buy point is on a breakout at 35. however, in view of the awesome news plus the matching TA up to now....i bought a substantial position yesterday. rarely have i found the TA and the FA in such perfect sync.
there are 14.5 million shares of this stock short. they surely do not want to negotiate an escape route thru the momo traders who pile in on a breakout. i believe the cap of 35 by ssb may be an attempt to slow down the trading to allow shorts to escape cheaply. surely no short anticipated a string of +50% sequential quarters.
a friend e-mailed me the official ssti customer list...
note it does not yet include qcom...which he said, may contribute another 40 million in revenues...perhaps someone here could post a reference to verify that.
In digital consumer
products, we provide memory components for consumer companies including Canon,
Datel, Freetron, GSL, IDT, Panasonic, Sanyo, Siemens, Sony, TiVo and Xerox. In
networking, we provide memory components for 3Com, E-tech, Intel, Nortel and
Xircom. In wireless communications, we provide products for companies including
Kirks, Lucent, Maxon, RTX, Siemens and VTech. In Internet computing, we provide
a wide array of memory components for companies including Acer, Apple, Asustek,
Compal, Dell, FIC, Gigabyte, Mitac, NEC and Quanta.
i also read...
SST also offers its SuperFlash technology for embedded applications through its world-class manufacturing partners and technology licensees IBM, National Semiconductor, Motorola, Samsung Electronics Co. Ltd., SANYO Electric Co., Ltd., Seiko Epson Corp., TSMC-Acer Semiconductor Manufacturing Co. (TASMC) and Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). TSMC offers SuperFlash under its trademark Emb-FLASHTM .
it hit me that all of ssti's customers are experiencing high growth...there is no reason to expect this to slow down anytime soon.
i was pleasantly surprised to find a licensing and presumably royalty play here as well...this is pure cash to the bottom line. it also indicates that ssti's patents are recognized as valid. i would think the licensing has to do with 2nd source requirements for some big customers who want a 2nd source available in the event of a problem at the first source.
i then read extensively about ssti's new embedded products and grinned. the embedded processor market is in hyper-growth and is expected to remain in a tornado for the next 3-5 years.
ssti has a long list of high quality, fast growing customers working in tornadoes, 4 consecutive quarters of extremely high growth in revenues and real profits, high margins, a forward pe of 17, no debt, lots of cash.
this is as close as i have seen to a no-brainer.
unclewest |
