From the Trading Desk

VDSI 1-4-07 to 10-15-07

VDSI was a pretty clear cut Featured long as it bounced right off the 50 DMA, broke out of a beautiful long term base and a short-term ascending base making it an easy choice to get long. Right after going long, the stock immediately shot up 20% which gave it a requirement that any stock up 20% in one week after your buy needs to be held at least 5-8 weeks. This only goes for Featured stocks, not lower quality stocks. This stock was clearly a near-perfect Featured long and I am disappointed I did not buy more but I was still in with a decent size position so I don’t have too much to complain about. As you can tell the stairstep the whole way up rode the 50 DMA like a champ. Ther were only a few times it tried to go below the 50 DMA and as you can see it showed bullish action both times it flirted with it. From the buy to the top, the stock gained 231% in nine months and two weeks. How could you tell it was topping? A weekly arithmetic chart clearly showed it going into a climax run and September and October started to see heavy distribution followed by lower volume rallies. These two tells after a 200% run are always going to be warning signs that a stock is close to a top.

the big buy:


the top:


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