SGI moved up again today following a harrowing drop at the open Wednesday followed by an immediate recovery. Today saw a higher high and a higher low in spite of lower volume. Looking at this from the perspective of support and resistance, it looks like some of the traders have gotten out and now the investors are getting in.
While this still has room to run I might be inclined to take profits around 9:45-10:30AM on Friday as the Level 2 shows weakening support, or at my planned 5% level ($9.27) - which ever comes first. If it makes a higher high before 11:00 then it might be considered for another day's hold, but as soon as it makes a lower high by 11:00AM on any given trading day after Friday, profits should be taken. If it holds support above half the body of the prior day's candle then I might consider getting back in for at least an overnight hold. This would likely be a 3:30-4:00 decision based on the volumes and their implied direction (support or resistance).
For this trade, if I would have made my market buy at the open I would have likely gotten my 1,000 shares at $8.83 - $8.85 per share based on the volumes transacted at that time. Today, SGI bounced off that $9.27 (5% over the $8.83 assumed purchase) as the high of the day. This represents a $440 gain minus any fees paid for the round trip.
If one were inclined to look at SGI as a longer term trade, the weekly chart shows this week as having a distinctly higher high and higher low, a good indicator of a longer term trade forming. The MACD, while having not crossed yet, is curling in that direction. Until that happens, and until SGI breaks above $9.94/share, this should be watched closely, regarded as a trade only, and any earnings reports should be carefully considered before holding large positions going into them. SGI has had a history of under-performing.
That said, a longer term trade might have, based on the weekly chart for the last year - shown above), 9.64 & 9.94 as price targets. If SGI breaks 9.94 then it could see as high $11-$12 as it fills in the gap from the precipitous drop it had earlier this year. That drop mimicked the drop from the middle of 2014 when SGI missed its numbers and triggered a sell-off.
If you like the products of Silicon Graphics, like I do, then they are a company to watch and buy on the big dips. they have a history of ground-breaking innovation in the domain of high performance graphics computing and engineering.
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