The volume in VLSI has been shrinking each day since Sep 3 when the stock first made the low at 7 1/4. I call this crash day and this is fairly typical action after a stock breaks down. Here is the volume and closing price for each day since then:
Sep 3: 4,011,100; 7 13/16
Sep 4: 2,477,700; 7 1/2
Sep 5: 1,468,200; 7 13/16
Sep 6: 1,140,400; 7 7/16
Sep 10: 563,600; 7 1/4
The volatility has also declined, with intraday trading ranges of only 3/8 to 1/2 a point. When you consider that the spread is 1/16 to 1/8, it's been next to impossible to make money day trading this stock lately. My sense is that the decrease in volume coupled with the stock holding above it's 52 week low indicates that the selling is drying up and those wanting to "invest" (as opposed to "trade") in this company are accumulating. The next move on increasing volume will probably give a big clue on which way this stock is heading in the short term but I think the bias is towards higher prices. If it moves through 8 1/8, I think it will fill the gap to 8 5/8, and if it gets through 8 7/8, then I think it will likely trade to 10. On the other hand, if it breaks down below 7, it will once again be in no man's land and I'm outa here again until it stabilizes. I'm currently long at an average price of 7 13/16. VLSI has historically based for one to two weeks before sustaining a rally after breaking down so I don't think what it is doing is unusual.
Dan |
