Thursday, January 31, 2008
by David Yu
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2/6/2008: Position got stopped out at $8.2601 today for a small loss
of 1.9% or $64.
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Lawson Software provides software solutions as well as consulting services for various industries worldwide. Visit Lawson site for more details. It's an interesting website with helpful info. S&P's equity analysts recommended LWSN back in December as they believed software firm like LWSN with broad product sets, diverse customer bases, sufficient geographic exposure, and a high degree of recurring maintenance revenues streams will weather economic uncertainty.
I like the fact that LWSN had beaten market earnings expectations in each of the past 4 quarters, but this is more of a technical trade for me. I like the way the volume formation was formed since the New Year. On the daily chart below (Chart 1), the negative volume bar (red bars) started diminishing during the second week of January even though the price continued to decline drastically - a clear sign of fading selling pressure. After the January 23 bottom, it started gathering positive volume bars (blue circle), which is a clear sign of accumulation.
I also like the formation of Aroon, one of my most favorite technical indicators. The green Aroon Up ran up across the red Aroon Down as the Aroon Down dropped below 30. The crossover further indicates growing accumulation of this stock.
Chart 1
The intraday chart (Chart 2) below also shows another positive crossover of one of my favorite indicators, the ADX (Average Directional Index by J. Welles). The negative component of the ADX, the -DI, had just crossed below the ADX curve (see blue circle) while the price stays in an uptrend channel.
Chart 2
I added LWSN to my long position at $8.4199.
Good hunting!
David Yu