Harmonic (HLIT)


"Harmonic Inc. is a leading provider of versatile and high performance video solutions that enable service providers to efficiently deliver the next generation of broadcast and on-demand services including high definition, video-on-demand, network personal video recording and time-shifted TV. Cable, satellite, broadcast and telecom service providers can increase revenues and lower operational expenditures by using Harmonic's digital video, broadband optical access and software solutions to offer consumers the compelling and personalized viewing experience that is driving the business models of the future. Harmonic is headquartered in Sunnyvale, California with R&D, sales and system integration centers worldwide. The Company's customers, including many of the world's largest communications providers, deliver services in virtually every country." (company website)

HLIT 3-month stock chart

Sell short

Harmonic hit a new 52-week high in November and has been trending down ever since. The one-month moving average is falling, and the 50-day moving average has leveled off.

  • Price momentum (PPO) — generally slowing, although did pick up briefly in the Santa Claus rally
  • Trend (ADX) — continuing to weaken, and selling pressure (-DI) is above buying pressure (+DI)
  • Money flow (CMF) — brisk outflow of money from the stock
  • Relative strength (RSI) — generally weakening, and stochastic RSI is pointed down
  • Volume — average daily volume is dropping slowly but steadily

Based on technical analysis, MarketEdge has HLIT a "short candidate" with a "weak downtrend" in the chart.

Buy to cover

loss Bottom line

On Monday when I sold HLIT short, HLIT was a short candidate in a weak downward trend. Today it is rocketing upward. I can find no news that would explain this sudden reversal of fortunes. On Tuesday, the company announced it had been awarded a "Science, Technology and Engineering Emmy® Award for their work in the development of Time Warner Cable's unique and highly successful Start Over service" (whatever that is — I'm a Time-Warner customer and I've never heard of it). That's two days ago, so any causality is hard for me to imagine.

Perhaps I could be a better trader if I could just accept the fact that the stock market is an unexplainable, random phenomenon. But if that's the case, I could lose my money at the casino and have much more fun. What's a body to do?