Network Equipment Technologies, Inc. (NWK)

Company

NWK 1-year chart NWK 1-year chart

"For nearly a quarter of a century, Network Equipment Technologies, Inc. (NET) has provided voice and data communications equipment for multi-service networks requiring high degrees of versatility, interoperability, security and performance. NETís broad family of products are purpose-built for mixed-service, multi-protocol networks; bandwidth-sensitive site communications; high performance, security-sensitive transmissions; and converged communications. The Companyís NX (network exchange) and VX (voice exchange) products enable interoperability and integration with existing networks for seamless migration to secure IP-based voice and data communications." (company website)

NWK 6-month chart
NWK 6-month chart

Buy

Network Equipment Technologies has been climbing steeply for the past year. I had held off buying until after earnings. When the company reported a loss of 37¢ compared to Expectations of a 4¢ profit, I thought the stock would go into freefall. But, after one session, it began climbing again, so I've decided to jump on. Apparently The Market considers the loss (due to massive charges) an anomaly and an omen of better things to come. Go figure.

  • Price momentum (PPO) — slowed during consolidation at $11, but now stable and likely to pick up again
  • Trend (ADX) — weakened by consolidation, but buying pressure (+DI) apparently crossing back above selling pressure (-DI) after earnings
  • Relative strength (RSI) — dipped to neutral, but rising again
  • Volume — three consecutive days of rising volume after correction

Based on technical analysis, MarketEdge calls NWK a "buy" in a "strong upward trend."

Sell

loss Bottom line
-9%

My initial scepticism was justified after all. Right after I bought NWK the price fell, but after crossing below the 50-day moving average and hitting the lower Bollinger band, it recovered and came back up to the price at which I bought. Perhaps, I thought, it is just consolidating before pushing upward. If only. Last week it fell below the average again, and has not been able to stay above $10. When it started to fall again today for the second consecutive day, I decided to bail out. In fact, MarketEdge now calls NWK a "short candidate."