Tellabs (TLAB)

Company

TLAB 1-year chart TLAB 1-year chart

"Tellabs advances telecommunications networks to meet the evolving needs of users. Solutions from Tellabs enable service providers to deliver high-quality voice, video and data services over wireline and wireless networks around the world. Ranked among the BusinessWeek InfoTech 100, Tellabs is part of the NASDAQ-100 Index, NASDAQ Global Select Market, Ocean Tomo 300™ Patent Index and the S&P 500." (company website)

TLAB 6-month chart
TLAB 6-month chart

Buy

About six weeks ago, I sold Tellabs short just before The Market decided it was a bargain; consequently, I suffered a modest loss. With the benefit of perfect hindsight, I bought at the turnaround point, and TLAB got another big boost when it beat Expectations by 2¢. Both the 50- and 200-day moving averages are now pointing up. So, I follow the adage, "If you can't beat 'em, join 'em."

  • Price momentum (PPO) — has risen sharply and picking up again after a slight slowdown
  • Relative strength (RSI) — after falling to neutral, now strengthening
  • Trend (ADX) — a bit weak (below threshhold [20]), but selling pressure (-DI) has fallen steadily for last two weeks
  • Volume — huge volume after earnings, and latest advances have been at normal volume

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

Sell

gain Bottom line
7%

Tellabs made a new 52-week high in yesterday's exhuberent trading session, jumping out beyond the upper Bollinger band. Since it's very hard, statistically, to maintain such an outlying position, I decided to take profits this morning, despite a very strong looking chart. TLAB had been hurt by analyst downgrades, and with earnings coming out in two weeks, it just seemed prudent to not look this gift horse in the mouth.