SimpleTech (STEC)

Company

"SimpleTech, Inc. is a global engineering and manufacturing company that offers memory and storage products for a wide range of industrial and consumer applications, including IP networking, consumer electronics, personal computing, and telecommunications." (company website)

STEC 3-month stock chart

Buy

SimpleTech has been climbing since the middle of last year (see sidebar), and it recently got a big boost when the company raised its earnings guidance for the quarter. This was followed by reaching a new 52-week high two weeks ago. I was sure it would come back down after the first of the year, and it did, retracing about 40% of the increase since the announcement that started the rally. The pull-back has, of course, made all my favorite indicators look like this is a bad buy.

  • Price momentum (PPO) — fell steeply in past two weeks
  • Trend (ADX) — weakened quite a bit, but still well above threshhold (20)
  • Money flow (CMF) — went from strong inflow to almost neutral
  • Relative strength (RSI) — tell from strong to neutral
  • Volume — average volume has doubled in past three months

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

Sell

loss Bottom line
-12%

The stop-loss order for STEC was triggered, capping my loss at 12%. I am totally irritated by this, however, because with the new high close on Wednesday, I should have raised the activation price, but did not. So, instead of breaking even, I take a loss. Argh!