The Worst Tech Stock Out There: Computer Sciences
- Posted by Greg Harmon
- on July 23rd, 2012
There are a lot of ugly charts out there and the Technology sector has more than its fair share. But one stock really stands out to me. Not only is it ugly on a daily time frame, but more so on a weekly and monthly one. It even has a name that brings you right back to the nineties: Computer Sciences Corporation, $CSC.
Computer Sciences Corporation, $CSC, weekly
The weekly chart above shows the stock down 30% this year and nearly 60% from its 2011 peak. Despite that ugliness the technical indicators still look weak. The Relative Strength Index is falling and bearish while the MACD is is negative, both supporting further downside. The Bollinger bands are running lower and all of the Simple Moving Averages (SMA) are pointing lower. Looking left the November 2011 low at 22.61 is the last level experienced in over 17 years. If it fails to hold there should be a continued march lower to the issuance price near 15 from 1994, as shown in the chart below, and then onward lower to zero. A price of $22 seems to be the key and should act as your trigger. You can participate in this via the options market, purchasing the August/January 2013 20 Strike Put Calendar for $1.30. Selling the August 20 Put and buying the January 2013 20 Put, this gives a lot of time for the continued run lower.
There is one fly in the ointment though. The 3-box reversal Point and Figure Chart has a current price objective of 54, massively higher. Clearly 22 needs to hold for that to happen. And if it does then the upside trade looks to be a August/March 2013 25 Strike Call Calendar for about $1.40. This would have a massive payout if the price were to rise to even 33 after August Expiry, for a 6% outlay.
Computer Sciences Corporation, $CSC, monthly
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
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)
Dragonfly Capital Updates
- Stay Crafty When You Are Thirsty
- Premium Earnings 6-18-13 Part 2: FedEx
- Premium Earnings 6-18-13
- Risk On or Just Baby Steps to the Sleeping Bear’s Cave
- Arch Coal is Worthless
- Premium Earnings 6-17-13
- Top Trade Ideas for the Week of June 17, 2013: Bonus Idea
- Top Trade Ideas for the Week of June 17, 2013: The Rest
- Top Trade Ideas for the Week of June 17, 2013: The Rest Premium
- Top Trade Ideas for the Week of June 17, 2013: The Best