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Chart of the Week - Aug 13, 2007

Island Information and Technology, Inc. (IS)

IS Monthly Chart - Held Below its Previous High at 0.34

charts are courtesy of Metastock

IS Daily Chart - An Inverted Hammer after a Hammer gives Mixed Signals 

charts are courtesy of Metastock

Legend: blue lines - range for Tsupiteros

            dotted blue lines - range for Position Traders

            red lines - important trend lines

By far, the best performing stock in this rally that we saw last week was Island Information and Technology, Inc. (IS). While most issues were only up by as much as 10 or 20% from their troughs, this one was up by more than 100% from its trough at 0.10. That certainly doesn't look like just a dead-cat bounce to me. I don't know what is now brewing with this company but the stock is certainly worth watching out for.

In its big picture, you can see that the stock has respected its previous high at 0.34, which it registered last 2000. Upon reaching 0.32 last July, it dropped down and lost 66% of its value in just three weeks time to form a trough at 0.10. Looking at the monthly chart above, I suspect that the stock will probably just continue to move sideways in here between 0.10 and 0.32 with its midline at 0.225.

In the short-term, from its trough at 0.10, the stock has managed to make a "dead-cat bounce" and climb up to as high as 0.23. It closed that day at 0.20, thus forming a sort of a bearish shooting star pattern. By Friday, when the US markets were down big time, the stock gapped down to as low as 0.175, continued to fall to as low as 0.15 but was able to end the day at 0.185. That behavior resulted in the stock forming a potentially bullish hammer pattern. I suspect that in the next couple of days, this stock will probably just move sideways between 0.15 and 0.23. While we know that there is heavy resistances at the 0.23 level, we also know that there is support at the 0.15 level.

While IS seems to be one of the more stronger stocks in the market right now, its trend is quite difficult to decipher. And usually, when the trend is ambiguous, the price will tend to go up and down since some people see the stock as bullish, while other will see the stock as bearish. For those who would like to trade IS, I would suggest that you simply follow the ranges and trade them accordingly by buying at the lows of the range and selling near the highs of its range. If prices break below 0.15, that 0.15 level will begin to act as a level of resistance. But if prices break above 0.23, that 0.23 level will begin to act as a level of support. This stock is certainly just for the Tsupitero at  the moment. No room yet for the buy and hold people for this stock.

Notes:

Short-term Traders/Tsupiteros vs. Medium-term/Position Traders: Recommendation for short-term traders or Tsupiteros are meant to be used by traders whose holding period are limited to one day to two weeks. Medium-term or position traders are meant to be used by traders whose holding period are two weeks to three months. Long-term investors whose holding period is more than three months should not follow these recommendations.