DGTL gives back 75% (0.12) of yesterday's 0.16 advance settling 0.02 below 1.60 - a level that we have seen reverse its role from acting as support in Jan-2008 and subsequently as resistance in Feb-2008 and Mar-2008. The stock's decline is as steep as yesterday's advance except that today's volume is noticeably lighter at only 701,000sh. Yesterday's volume is 14,842,000sh - over 21x today's accompanying turnover and close to 9x that of the 15-day MA - supporting the validity of the breakaway move. However, it is price, not volume, that ultimately matters, and I will be hard pressed to find a more illustrative example of this object lesson than this recent 2-day extreme turnaround. The more aggressive trader would have entered yesterday during the frenzy, and the less risk tolerant would have waited for a continuation signal today before participating. That is not to say that one technique is better than the other because there are obvious trade-offs between the 2 systems. The aggressive trader stands to be stopped earlier with a small loss in case the breakout fizzles but if the advance prospers, he gets to capture the bigger portion of the up move by participating earlier. By waiting for a second day confirmation, the risk averse trader avoids taking a premature loss in case a quick fade out occurs but if the breakout promptly catches fire he gets to climb on board a bit later in the move sacrificing the early portion of the advance. In any case, I will be looking closely at the critical level of 1.60 and whether (a) another role reversal is in the offing that could provide a base from where the stock price stabilizes and continues its advance or (b) it continues to act as resistance that sends the stock re-entering the confines of the 1.42-1.60 trading band. For those who participated yesterday, the focus of the trade now shifts to risk management and swift execution of stops in case a range pattern re emerges.
PRICE AND TURNOVER
Close: 1.5800 * Change: -0.1200 (-7.06%) * Value: 1,117,800
TECHNICAL ANALYSIS
Primary trend undefined * Intermediate uptrend * Short term consolidation * Prior support 1.42 * Potential support (role reversal) 1.60 * Resistance 1.84 * Faded breakout of 3-month range * Potential price objective of breakout move 1.84
* Personal Disclosure: I own a trivial number of shares of DGTL.
PRICE AND TURNOVER
Close: 1.5800 * Change: -0.1200 (-7.06%) * Value: 1,117,800
TECHNICAL ANALYSIS
Primary trend undefined * Intermediate uptrend * Short term consolidation * Prior support 1.42 * Potential support (role reversal) 1.60 * Resistance 1.84 * Faded breakout of 3-month range * Potential price objective of breakout move 1.84
* Personal Disclosure: I own a trivial number of shares of DGTL.
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