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Positive Reversal After Gap Down; Proposed Offering - Tuesday, October 02, 2007
Statistically, about 40% of winning stocks will pull back after breaking out. In other words, it is not uncommon for stocks to pullback and retest support near their pivot point after breaking out. It is important to see the bulls show up and offer support at or above the pivot point. This may offer investors a chance to increase their exposure before the stock continues advancing. However, an important caveat is that volume should contract as the stock pulls back towards its pivot point. Heavy volume behind losses can be cause for concern, especially if the stock does not find support at its pivot point. Whenever a recent breakout is completely negated by a loss that leads to a close back in the prior base, this is construed as a technical sell signal and a sign that the bears are regaining control.
Ceragon Networks Ltd. (CRNT $1.95 or +9.83% to $21.78) announded today that it has filed a registration statement with the U.S. Securities and Exchange Commission for a proposed follow-on offering of 6 million ordinary shares. The stock gapped down at the open, then quickly rebounded. Today's action met the definition of a "positive reversal" day as it erased its early loss to closed with a big gain for a new all-time high. It was encouraging to see the stock finding support near its $18.70 pivot point. Volume today was over 2.5 times above average as this high-ranked leader vaulted above its $19.64 maximum buy price. This stock was first featured in the October 2007 edition of the CANSLIM.net News (read here). CRNT cleared all technical resistance on Friday after finding support at its 50 DMA line. Now that this stock has successfully retested its pivot point after triggering its latest buy signal, it is important for investors to remain disciplined and avoid chasing the stock above its $19.64 maximum buy point.
It is encouraging to see that this company's stock has its Earnings Per Share (EPS), Relative Strength, and Composite ratings all pegged at 99, the highest possible readings. The company has managed to increase its earnings by well above the +25% guideline in the past four quarterly comparisons versus the year earlier, easily satisfying the "C" criteria. CRNT resides in the Telecom-Wireless Equipment group which is currently ranked 30th of out the 197 Industry Groups covered in the paper, placing it in the much preferred top quartile. This helps satisfy the L criteria of it being a leading company in a leading industry group. The bulls remain in control as long as this high ranked stocks continues trading above its pivot point.
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Telecom Equipment Firm Leaps Above Prior Highs - Sunday, September 30, 2007
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Ceragon Networks Ltd. |
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Ticker Symbol: CRNT |
Industry Group: Telecom- Wireless Equip |
Shares Outstanding: 22.0 Million |
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Price: $18.70 9/28/07 |
Day's Volume: 2,287,400 9/28/07 |
Shares in Float: 27.9 Million |
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52 Week High: $19.22 9/28/07 |
50-Day Average Volume: 1,312,000 |
Up/Down Volume Ratio: 1.1 |
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Pivot Point: $18.70 8/27/2007 high plus .10 |
Pivot Point +5% = Max Buy Price: $19.64 |
Web Address: http://www.ceragon.com |
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CANSLIM.net Profile: Ceragon Networks, Ltd. engages in the design, development, manufacture, and sale of point-to-point wireless backhaul solutions. Ceragon Networks' products are primarily used by cellular operators, and by organizations and enterprises. The company sells its products through a direct sales force, systems integrators, distributors, and original equipment manufacturers in North America, Europe, Middle East, Africa, Latin America, and the Asia-Pacific. Ceragon Networks was founded in 1996. It was formerly known as Giganet, Ltd. and changed its name to Ceragon Networks, Ltd. in 2000. The company is headquartered in Tel Aviv, Israel. The company's ranks excellent. The Earnings Per Share (EPS), Relative Strength, and Composite rating are all pegged at 99, the highest possible readings. Return on Equity of 14% is slightly below the 17% guideline. The company has managed to increase its earnings by well above the +25% guideline in each of the past four quarterly comparisons versus the year earlier (satisfying the C criteria) and its annual earnings history (the A) is solid. CRNT resides in the Telecom-Wireless Equipment group which is currently ranked 31st of out the 197 Industry Groups covered in the paper, placing it in the much preferred top quartile. This helps satisfy the L criteria of it being a leading company in a leading industry group. Management owns 13% of its shares, which provides good motivation to protect and build shareholder value.
What to Look For and What to Look Out For: The stock has cleared all technical resistance and odds favor further price gains. Ideally, this stock would continue rallying on heavier volume over the next few days and weeks which would help confirm the breakout. Disciplined investors know it is best to accumulate shares after a stock has risen above its pivot point but while it is still below its maximum buy price ($19.64 in this case), so they might watch for the chance to accumulate shares on a light volume pullback. Undisciplined buys can hurt your investment results. Caution and a disciplined sell strategy could be required, and concerns would definitely be raised if the stock reverses to a close which negates its breakout above the $18.18 mark which was its best high close (on August 24th) prior to the latest bullish action. Technically, if that occurs, the stock becomes more likely to spend a lot more time consolidating in its prior base. It is not wise to hold a struggling stock, leaving it open to get into bigger trouble or a fundamental disappointment. Always limit losses if any stock you buy closes 7-8% below your purchase price.
Technical Analysis: On Friday, September 28th, 2007, CRNT triggered a technical buy signal when it surged above its $18.70 pivot point with gains on heavy volume that was nearly two times its average total. After briefly violating its 50-day moving average (DMA) line, this stock found prompt support and quickly returned to its old highs and beyond. Whenever a stock explodes out of a sound base and vaults to new highs it suggests that there is strong institutional sponsorship (the I criteria). Thus far, the recent volume patterns have been bullish, which is best indicated by the fact that volume was light before the stock broke out and surged as the stock was climbing to new highs. Notice how the volume totals have ramped up since its earlier breakout on April 30th.
STWNM - Telecom Equipment Firm Leaps Above Prior Highs - Saturday, September 29, 2007
Ceragon Networks Ltd. Ticker Symbol: CRNT Industry Group: Telecom- Wireless Equip Shares Outstanding: 22.0 Million Price: $18.70 9/28/07 Day's Volume: 2,287,400 9/28/07 Shares in Float: 27.9 Million 52 Week High: $19.22 9/28/07 50-Day Average Volume: 1,312,000 Up/Down Volume Ratio: 1.1 Pivot Point: $18.70 8/27/2007 high plus .10 Pivot Point +5% = Max Buy Price: $19.64 Web Address: http://www.ceragon.com
C A N S L I M | StockTalk | News | Chart | SEC | Zacks Reports
CANSLIM.net Profile: Ceragon Networks, Ltd. engages in the design, development, manufacture, and sale of point-to-point wireless backhaul solutions. Ceragon Networks' products are primarily used by cellular operators, and by organizations and enterprises. The company sells its products through a direct sales force, systems integrators, distributors, and original equipment manufacturers in North America, Europe, Middle East, Africa, Latin America, and the Asia-Pacific. Ceragon Networks was founded in 1996. It was formerly known as Giganet, Ltd. and changed its name to Ceragon Networks, Ltd. in 2000. The company is headquartered in Tel Aviv, Israel. The company's ranks excellent. The Earnings Per Share (EPS), Relative Strength, and Composite rating are all pegged at 99, the highest possible readings. Return on Equity of 14% is slightly below the 17% guideline. The company has managed to increase its earnings by well above the +25% guideline in each of the past four quarterly comparisons versus the year earlier (satisfying the C criteria) and its annual earnings history (the A) is solid. CRNT resides in the Telecom-Wireless Equipment group which is currently ranked 31st of out the 197 Industry Groups covered in the paper, placing it in the much preferred top quartile. This helps satisfy the L criteria of it being a leading company in a leading industry group. Management owns 13% of its shares, which provides good motivation to protect and build shareholder value.
What to Look For and What to Look Out For: The stock has cleared all technical resistance and odds favor further price gains. Ideally, this stock would continue rallying on heavier volume over the next few days and weeks which would help confirm the breakout. Disciplined investors know it is best to accumulate shares after a stock has risen above its pivot point but while it is still below its maximum buy price ($19.64 in this case), so they might watch for the chance to accumulate shares on a light volume pullback. Undisciplined buys can hurt your investment results. Caution and a disciplined sell strategy could be required, and concerns would definitely be raised if the stock reverses to a close which negates its breakout above the $18.18 mark which was its best high close (on August 24th) prior to the latest bullish action. Technically, if that occurs, the stock becomes more likely to spend a lot more time consolidating in its prior base. It is not wise to hold a struggling stock, leaving it open to get into bigger trouble or a fundamental disappointment. Always limit losses if any stock you buy closes 7-8% below your purchase price.
Technical Analysis: On Friday, September 28th, 2007, CRNT triggered a technical buy signal when it surged above its $18.70 pivot point with gains on heavy volume that was nearly two times its average total. After briefly violating its 50-day moving average (DMA) line, this stock found prompt support and quickly returned to its old highs and beyond. Whenever a stock explodes out of a sound base and vaults to new highs it suggests that there is strong institutional sponsorship (the I criteria). Thus far, the recent volume patterns have been bullish, which is best indicated by the fact that volume was light before the stock broke out and surged as the stock was climbing to new highs. Notice how the volume totals have ramped up since its earlier breakout on April 30th.