Orckit Communications (ORCT)

Company

"Orckit Communications Ltd. is a leading provider of advanced telecom equipment targeting high capacity packetized broadband services. Orckit is engaged in the development of new telecom products technologies targeting packetized services offered in metro and access networks." (company website)

ORCT 3-month stock chart

Sell short

Orckit Communications was in a downtrend for much of 2006, bottoming in mid-year (see sidebar). Since then it has bumped along sideways, trying to reverse the trend. Although the 50-day average is rising, the 200-day average is still falling sharply, and ORCT has not been able to sustain a breakthrough of either one.

  • Price momentum (PPO) — slowing steadily over three months
  • Trend (ADX) — weakened, now just at threshhold (20)
  • Money flow (CMF) — flowing out
  • Relative strength (RSI) — about neutral
  • Volume — average volume is falling

Based on technical analysis, MarketEdge calls ORCT a "short candidate" in a "strong downward trend."

One gotcha for ORCT is that earnings are due to be released in a week, and I'll have to be on guard against surprises.

Sell

loss Bottom line
-7%

My stop-loss order triggered this morning, resulting in a loss. The price jumped this week, buoyed perhaps by a general rally in Israel stocks. It broke through both the 50-day and 200-day moving averages. After earnings are released, I will have to re-evaluate this — the chart was mixed to start with, and earnings may change the picture one way or the other.