“On Feb. 16, I wrote in this column that SCOX stock ‘…broke a
key level of support around $13.5-ish, establishing a downtrend and
putting in place a five-month top.’ At the time, I wrote that ‘SCOX
is looking to test the next important area of chart support–at
around $8.5 to $9–so I would hold off starting a long position for
now.’“Since then, the stock has fallen 36% from the high $13s to
close Wednesday, March 17, at $8.74. $10 was pretty significant
support for the stock, and while it has obviously violated that
level, the volume seems to be decelerating. SCOX is getting pretty
close to that low-end of the area of support of around $8.5 to $9.
I might be concerned if I was short at this level and would start
reeling in some of a short position around here. Short-term, at
some point I expect SCOX to bounce a bit and it could potentially
run back up into resistance at $10. That said, I don’t like the
stock on the long side for a longer-term position and see $5 as
downside, although I’d like to see some more volume on the downward
move…”
Related Story:
IT Manager’s Journal: IT Investor’s Journal: An Analysis of SCO
Group(Feb 17, 2004)