They don't all work out. After gapping up in June, Applied Signal Technology's (APSG ) stock chart has misbehaved, which is why I'm placing a hold on the company's shares, first recommended on June 22, 2009, at a price of $24.34. Despite a decent third quarter EPS performance of 25 cents, 1 cent below the First Call Q3 EPS estimate of 26 cents, institutional investors have continued to exit the stock, with the stock recording several dips below the key, 50-day moving average line.
Further, in the last two months, Applied's shares have formed a bear-hug pattern -- a bearish signal. There is support at or near $18 -- the final barrier. Hopefully APSG can find support there; if not, the position will be closed, hence the hold rating for now. The First Call FY2009/FY2010 EPS estimates for APSG are $1.08 to $1.18.
Stock Analysis: Don't buy Applied Signal Technology's shares at this time. If you bought shares in June, hold the shares. Sell/stop loss: $11.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
Newspaper ad revenue of 28%, 8 quarters of double-digit drops
Closing Bell: Earnings working against stocks (BCRX, DELL, DHI, INTC, LEAP, PCS)
Chasing Value: E-Trade, a word of caution
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