No good deed goes unpunished

The hammering of TSYS

tsys_1yr TSYS 1-year chart – rising in a clear channel

Go figure! Telecommunication Systems (TSYS) has been climbing steadily for several months — the chart support line goes all the way back to July of 2008. The up and down oscillations have been very regular for at least six months. At the end of April TSYS reported earnings:

  • handily beat Expectations, netting 16¢/share compared to an expected 15¢
  • raised earnings guidance for the year

One might think that would result in a new price surge.

tsys_20090506 5 days of getting hammered

One would be wrong. That good news began five consecutive days of hammering: down, down, down, down, down.

The company's only sin, as far as I could tell, was that they were cautious about predicting the future, refusing to be drawn into specifics during the earnings call.

After trading ended on Friday, Dow-Jones news tried to explain away the hammering: Telecom Systems Shares Drop Despite Strong 1Q.


On the third day of hammering, TSYS broke below the 50-day moving average.

On the fifth day of hammering, TSYS broke below the 200-day moving average.

Both of those are very bearish omens, but what's a body to do? I'm now down 20% ($9.50 - 20% = $7.70), but to get back where I started from, the stock has to rise 23.5% ($7.70 + 23.5% = $9.50). If I bail, I lock in the loss and will have to make an extra $900 on some other stock to make up the loss. Argh!

About the best that I can hope for is that this huge sell-off (6.5 million shares in 5 days) is what is known as "capitulation" — the point at which all but the hard-core abandon the stock, which is generally followed by a new up-cycle.

One thing is certain: If TSYS goes down much more, I will be the one capitulating.