© Copyright 2010-2012, MarketHistory.com
Unauthorized mirroring, photocopying, facsimile or any other
distribution of this copyrighted material is prohibited.
All rights reserved.
Digi International - Trend Day Down in May 
Tuesday, May 25, 2010
By Gibbons Burke
Digi International (DJII3) shares fell for the fifth straight day on Monday, declining by a 'big' -3.6% on a 'trend day' pattern decline to close at $8.93, down a 'large' -10.1% over the last five trading days. The trend picture is fully bearish, with the stock below all the moving averages we follow. Things look rather bleak, but history suggests this might be a good time to pick up shares while they're cheap.
Q: How has DJII performed in the past after a 'trend day' decline, where the stock opens in the upper 20% of the daily range and closes in the lower 20%, in the month of May?
A: According to the 15 previous occurrences of this event, EventEdge indicates that DGII has shown a strong bullish edge that peaks 17 trading days after the event. Thus, the projected date for the peak of the bullish edge relative to the current event date (Monday, 24 May 2010) is Wednesday, 16 June 2010. DGII rallies in 93% of the cases (14 of 15) by an average of 10.3% relative to the close on the event date. The average of the 1 decline is -2.9%. The overall return of the 15 cases is 9.4%, which, based on the close of DGII on the event date ($8.93), provides a target price of $9.77.
Click here4 to check this trading idea out in EventEdge®.
Gibbons Burke5 is editor of MarketHistory.com.
 |
Let variable values:
@ = GII.DGII.NASDAQ
theEvent = IF {
(@ - Low of @) is less than (0.2 * (High of @ - Low of @))
AND
(High of @ - Open of @) is less than (0.2 * (High of @ - Low of @)) }
AND
Date is May
THEN 1
ENDIF
Date Day t t+5 t+10 t+15 t+17
05/16/1994 Mon -3.7 3.8 1.9 13.5 17.3
05/18/1995 Thu -0.9 -0.3 -3.8 3.5 7.9
05/10/1996 Fri -1.8 -0.9 -4.5 8.6 5.5
05/15/1998 Fri -7.6 3.0 3.0 6.0 6.6
05/27/1999 Thu -6.8 -4.3 -6.5 -4.3 5.1
05/19/2000 Fri -3.4 -5.8 2.3 4.7 8.1
05/16/2001 Wed -1.9 3.9 16.2 17.7 18.3
05/07/2003 Wed -1.9 -5.9 0.5 13.4 16.2
05/21/2003 Wed -1.3 12.9 19.6 15.0 15.0
05/18/2004 Tue -1.5 4.0 4.3 6.6 5.4
05/17/2005 Tue -2.5 7.2 4.5 7.0 5.0
05/01/2006 Mon -4.5 11.8 -2.2 -0.7 -2.9
05/18/2006 Thu -3.6 6.1 5.3 3.6 3.8
05/24/2007 Thu -5.1 4.3 4.8 8.1 8.4
05/05/2009 Tue -5.5 6.9 10.1 15.8 22.0
05/24/2010 Mon -3.6 NaN NaN NaN NaN
Avg -3.5 3.1 3.7 7.9 9.4
AvgPos NaN 6.4 6.6 9.5 10.3
AvgNeg -3.5 -3.5 -4.3 -2.5 -2.9
PctPos 0.0 66.7 73.3 86.7 93.3
PctNeg 100.0 33.3 26.7 13.3 6.7
Maximum -0.9 12.9 19.6 17.7 22.0
Minimum -7.6 -5.9 -6.5 -4.3 -2.9
StdDev 2.0 5.7 7.3 6.3 6.8
ZStat -1.7 0.5 0.5 1.3 1.4
Variance 4.0 32.7 52.6 39.2 46.0
16 Occurrences |
Comments:
Web Address of this trading idea:
Links:
2 http://www.markethistory.com/content/analog/analog.html?ticker=DGII
3 http://quote.morningstar.com/stock/s.aspx?t=DGII
4 http://admin.markethistory.com/events/stocks/chart.html?ticker=DGII&events=TrendDayDown0,month&date=2010-05-24
5 http://www.markethistory.com/staff/detail.html?s=gibbons