Centennial Communications (CYCL)

Company

"Centennial Communications, based in Wall, NJ, is a leading provider of regional wireless and integrated communications services in the United States and the Caribbean with approximately 1.4 million wireless subscribers and 371,500 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Caribbean business owns and operates wireless networks in Puerto Rico, the Dominican Republic and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe and an affiliate of the Blackstone Group are controlling shareholders of Centennial." (company website)

CYCL 3-month stock chart

Buy

Centennial has popped up in my screens for several months, but I've never taken the bait. After hitting a new 52-week high in late December, CYCL took a big hit after announcing in January that it had swung to a loss compared to a year ago. This drove the price back down very close to the 50-day moving average, which is rising, and well above the 200-day moving average that has stopped falling. Although the chart looks very dicey, my thinking is that the high-volume sell-off has driven out most of the weak at heart and the stock is likely to start rising again. I am encouraged by yesterday's session in which CYCL gapped lower to open, traded even lower, but came back to close up on the day. This is usually a bullish sign. Just to be on the safe side, however, I've set my stop-loss activation price higher than I normally would (-5% instead of -8%).

  • Price momentum (PPO) — slowing sharply
  • Trend (ADX) — weakening quickly, but for last two weeks selling pressure (-DI) and buying pressure (+DI) have been cross-crossing, which should portend a reversal
  • Money flow (CMF) — still flowing in (barely), and hints of picking up again
  • Relative strength (RSI) — has fallen to the weak side of neutral, but signs of leveling
  • Volume — sell-off was much higher volume than normal

Based on technical analysis, MarketEdge calls CYCL a "buy" in a "strong upward trend" and at a "good entry point" because it is oversold.

Sell

gain Bottom line
9%

Centennial came this close to surpassing the new 52-week high made at the end of 2006, but began slipping down. The stop-loss order kicked in today, leaving a fair amount of money on the table, but pocketing a nice profit as well. It will be interesting to see how much more CYCL deteriorates before going back up, if it does, of course.