Category Archives: Long Term Stocks

Logitech International is Now Over the Hump (LOGI)

To say the past twelve months have been tough ones for Logitech International SA (NASDAQ:LOGI) might be an understatement. Shares have fallen from a high of $10.29 last September to a low of $6.24 in April of this year. Though LOGI hasn’t traded lower than that since then, it’s not like the stock’s suggested it wants to stage a major recovery… unless maybe you look really, really close. Well, I did.

If the name rings a bell, it may be because you’ve got some Logitech International SA equipment attached to the device you’re using right now. The company makes computer peripherals – speakers, keyboards, cameras, etc. Their stuff is among the best in the industry. That’s not why I’m rapidly becoming a fan of LOGI, however. In fact, the organization has failed to turn a profit over the past four quarters (on a net basis). I’m rapidly becoming a fan because the chart says the worst of the company’s sales and earnings struggles are behind it.

How’s that? In simplest terms, LOGI has now made a higher high following a higher low. It’s the first time it’s happened in over a year.

Don’t discount the importance of that detail, and its technical ramifications. Logitech International SA has been working on this rebound for months, slowly logging an arc-shaped reversal (the kind that sticks) since late March. As of this week, however, that turnaround effort finally finds the undertow working in its favor.

Analysts foresee numbers that jive with the stock’s recovery. After Logitech International lost a total of $175 million over the past twelve months on $2.11 billion in sales, these pros are looking for a per-share loss of $1.11 for that timeframe to turn into a $0.27 profit per share this fiscal year. Sales are still expected to roll in at only $2.03 billion this year, but are projected to improve to $2.08 billion in fiscal 2014, when the company should earn $0.43 per share. That’s officially a turnaround.

It’s not just a pipedream either. Last quarter, LOGI beat estimates for the top line as well as the bottom line. Better still, the company is now on a mission to divest all divisions and product lines that aren’t profitable by the end of 2014. That’s music to investors’ ears, played by Logitech speakers.

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The Venaxis Spring is Coiled (APPY)

I know on the surface that Venaxis Inc. (NASDAQ:APPY) hasn’t exactly been the most riveting of stocks lately. Heck, APPY shares are exactly where they were at the end of July, and volume has been even less than minimal. I’m telling you though, there’s just something about this stock – and its chart – that tells me an explosive bullish move is brewing.

Just as a preface to a chat about APPY, think about a spring that’s coiled. There’s potential for a violent “boing”, but as long as whatever’s keeping the spring is coiled, then that potential de-coiling is irrelevant. If for some reason the spring’s shackles are undone, the look out – BOING! Yeah, well, just think of Venaxis Inc. as a coiled spring. It’s not doing anything right now, but it could very easily make an explosive bullish move with just one small (and easy to achieve) catalyst.

The Venaxis spring has been coiled by a rising support line and a falling support line. The rising support line is the 50-day moving average line (purple), while the falling support line is the 100-day moving average line (gray). Those two moving averages are on a collision course though, and clearly APPY can’t drift sideways between the two when there’s no space to waffle in between then.

But how do we know APPY is apt to make a bullish break rather than a bearish one? Truth be told, we don’t; there are never any guarantees in trading. But, there are some clues in place that suggest the undertow is bullish.The biggest clue in favor of bullishness from Venaxis Inc. is the fact that the stock’s actual still in a broad (even of wobbly) uptrend since June’s lows. The way shares have been gyrating around the $1.46 mark is also a biggie. That line was resistance in June and July, and though it’s not exactly become a support line yet, clearly the buyers are having no problem holding the stock above that former technical ceiling.

As for the timing, we’re apt to see the spring uncoil sooner than later. Though just gyrating around the $1.46 mark, we can also see the string of higher lows and lower highs has pretty much taken APPY to the pointy tip of a wedge shape [aided by the two key moving average lines]. The contraction is squeezing the chart tighter and tighter, but there’s no room left… the pressure building.

The proverbial green light is a close above the 100-day moving average line, currently at $1.48. Not only will a move above the 100-day line crack what’s been a tough ceiling, it will also rock Venaxis Inc. shares out of the converging wedge pattern.

The trick is exercising patience until that one last step is taken.

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Take the Sigma Labs Clues at Face Value (SGLB)

For veteran traders who’ve kept tabs on Sigma Labs Inc. (OTCMKTS:SGLB) over the past three months or so, it may be surprising to hear someone suggest it as a buy. Like so many other stocks of its ilk have done since the beginning of the organized market, SGLB went from (proverbially) zero to hero between late May and mid-July with a move from $0.025 to a peak of $0.118 only to fall back to the $0.04 level a couple of weeks later. It’s the relatively common “one hit wonder”, and if Sigma Labs followed the usual pattern of other small stocks that burned brilliantly for a few days, we wouldn’t see anything particularly bullish from SGLB for a few months, if not years.

A funny thing happened on Sigma Labs’ return trip back to irrelevancy, however. Rather than fade back into the funk it was in before May, SGLB shares renewed their strength. This second wind is not only a trading opportunity in itself, it may point to a much bigger brewing move… if the subtle clues are any, well, clue.

The chart of SGLB tells the story. As you’ll see, shares were unusually hot beginning in June, fueled by some significant – and new – attention thanks to the company’s participation in a retail investor conference. We later learned why Sigma Labs Inc. was suddenly so interested in a PR effort… it needed to raise money, announcing on July 24th it had raised $1.2 million. Yes, that dilution was the catalyst for the late June pullback – investors hate dilution (not to mention that the post-conference euphoria can’t last forever).

Thing is, though dilution stinks, SLGB may well be one of the few technology companies that can actually turn that $1.2 million into more money for investors. That’s what the chart’s saying anyway, and we should take those hints at face value.

The first hint, aside from the fact that Sigma Labs is on the rise, is where the rebound took shape… right at the 100-day moving average line (gray) between July and August. Reversals that take shape at known support and resistance lines tend to be the real deal. The other big clue (and this one just appeared within the last few days) is the way volume is starting to grow again on the way up. With more and more participation rather than less and less, the effort has a good chance of lasting a while. Take a look.

There’s till risk with SGLB to be sure, but that’s nothing new – there’s always risk. The odds here, however, are better than average given the clues we’ve seen thus far. The second wind moves often end up being the game-changer, for the better.

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