LSI, PIR, VLSI.
There's no doubt that these three stocks are in a down trend. However, what stock isn't in a downtrend right now? One can make a strong case for a countertrend rally based on some of the comments that I made yesterday but I wanted to offer an opinion on the directional movement indicator (DMI) because it often gives good countertrend buy signals. The DMI is made up of three three lines, the ADX, +DI, and -DI. Whenever the ADX gets in the 70 to 80 range and the +DI gets below 5, a short term bottom is usually indicated and a sharp countertrend rally follows. The spread between the -DI and +DI is also important, with wider spreads more coincident with countertrend moves. With that in mind, here's how the DMI shapes up for LSI, PIR, and VLSI.
LSI: ADX = 79; +DI = 1; -DI = 32
VLSI: ADX = 68; +DI = 4; -DI = 47
PIR: ADX = 79; +DI = 1; -DI = 41
LSI closed higher for the first time in fourteen trading days on Friday. The money flow was also positive for the first time in nine trading days and it held it's 52 week low despite the huge sell programs that hit the market Friday. VLSI had very strong positive money flow on Friday and also held it's 52 week low on above average volume. The high volume combined with the stock holding above the crash low set Thursday indicates that buyers with size were in the market. If they hadn't been in the market, then the stock would have fallen further. If there had been a lack of bids with that much selling, then the price would have had to have fallen. The money flow into PIR has been up four of the last five days. I think that the positive money flow into these stocks, combined with above average volume, and the DMI indicator coming into a buy range, is good news for the short term. I'd appreciate input from others.
Thanks,
Dan |
