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Technology Stocks : VLSI Technology - Waiting for good news from NASDAQ !!!
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To: Paul Dubsky who wrote (3912)7/25/1998 9:10:00 PM
From: DanZ  Read Replies (2) of 6565
 
Paul,

VLSI is in a trading range between 16 and 20 1/2 with a slight upwards bias. It is again testing the lower end of the range and is providing a low risk entry point with further support near 15. The money flow is neutral and the daily stochastic is somewhat negative because it made a lower high and a lower low. The stock also closed below the middle weekly bollinger band last week--a negative. Even if VLSI breaks support at 16, it has very good support on the weekly and monthly charts near 15. This isn't a lot of additional downside risk.

The SOX, of which VLSI is a component, has a very similar chart. The index has support at about 243 and even stronger support near 232. If the SOX breaks 243, I think it would probably put additional pressure on VLSI. Since there is no way to predict what will happen, I would buy some now and buy more if it declines to the low 15 area. If you don't buy it now with the hope of picking it up near 15, you might miss a rally if it doesn't get there. This is the risk in trading but I don't think an extra $1 of downside is much to worry about.

There are several reasons why I want to own VLSI. The chart looks good, the financial statements look good, the future prospects for the company's business look good, the valuation is reasonable, there is a chance that they will be acquired, and I think the SOX is in for an extended bull market. I see no reason not to own this stock and plan to continue to hold some and trade some as I have been doing since early March.
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