MACD/DMI: New Buy Signal on Taser
By Ian L. Cooper, Market Report
Ann Sosnowski has often spoken about Taser. As for myself, I have gotten readers in and out of the underlying stock and call options several times over the last couple of months on bullish courtroom news, new product news, and breakouts using MACD and DMI crossovers in agreement in Early Alert Trader.
On the news front, the company just announced the first shipment of the Taser C2 for consumer use. Nowadays, for a reported $300 retail price tag, you can order your own Taser. Less powerful than the police version, the C2 shoots barbs that pierce the skin and deliver an incapacitating jolt of electricity.
Technically speaking, a 10-day hourly chart gave us a buy signal using MACD and DMI crossovers. On the hourly chart, the DMI+ crossed above DMI- on Wednesday. Now all we needed was confirmation of a trend with a MACD 12-day and 16-day cross above the MACD 9. We got that MACD confirmation on Thursday morning, right before the stock ran from about $16.40 to more than $17.34 a few hours later.
The Directional Movement Index (DMI) shows directional movement with three components: ADX, DMI+ and DMI-. We use the DMIs. DMI+ shows positive movement in a stock or index. DMI- shows negative movement in a stock or index. When the DMI+ crosses above the DMI-, the stock or index is a sell. When the DMI- crosses below DMI+, it’s a buy.
However, we still need agreement to validate trend. That’s where MACD comes in, using the point spread between two EMAs of the closing price. It’s used as a trend indicator, spotting divergences in charts.
Ian
Other Related Articles
Battling back, Taser to Sell Military-Style Device
Taser’s Rally Should Be Slow to Die
Taser, IRobot Team up to Arm Robots
Investing in Taser: Ride Taser International to $25 a share by December of 2007
Investing in Taser: Ignore the Sensationalisml
Investing in Taser: I Love the Smell of Burning Shorts in the Morning...