Rovi Corp – Long or Short? Yes!
- Posted by Greg Harmon
- on July 18th, 2012
Rovi Corp, $ROVI, lowered their sales guidance after the close Tuesday and the stock, which was in a steady decline, was hammered Wednesday, down over 43% on more than 25 times normal volume. This has all the signs of a capitulation day. So is it time to get long the stock? Well that depends on your time horizon. The daily chart below shows the volume and price moves mentioned, but also has indications that a short term trader would look at and prepare to buy. The Relative Strength Index (RSI) closed at 8.48. It is technically oversold when this indicator of momentum reaches 30. A reading under 10 rarely lasts more than a day. The Bollinger bands also
Rovi Corp, $ROVI, Day
show that price closed nearly 30% below the bottom band. Another rare occurrence, but a second one is shown on November 9th on this chart. Rather than just buying look for a bounce and upward momentum on a 5 minute or 30 minute chart before hopping in on the long side, as these indicators can work off their weakness through time. What about getting short? Well if you have a longer time frame that can still be a good play. The weekly chart below shows that the price has firmly moved away form the 76.4% Fibonacci retracement of the move higher from 2008 to January 2011 and should draw to the 100% retracement at 8.46. There is upside resistance at the 12.50 area from 2008 so look for any short term pop that stalls there as an opportunity to get short for that full retrace.
Rovi Corp, $ROVI, Week
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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