Recently I started to notice the emergence of what I would call “Hardware Based Security Investment Theme”. Three stocks caught my attention while doing my usual scanning. CAVM – Cavium Networks, VDSI – Vasco Data Security and WAVX – Wave Systems. I now own all three of them with CAVM being the newest addition. Regardless of a potential theme developing, CAVM is a buy in and of itself due to the new all time highs it is printing and its decent overall pattern pressure. As you can see in the annotations I like the small almost imperceptible gap up around the all time high area. This is most likely an important clue regarding buyers’ conviction and decisiveness. From a psychological perspective it simply means that instead of being seen as resistance the all time high area was taken out with ease and buyers displayed an urge to get in. Simply put: Strong buying pressure. Ideally volume should now start to come in. A sign of strength would be for the stock to keep running without looking back and filling the recent gap. Then again the rather low risk stop loss level around 46.80 would take care of that.
Click on chart to enlarge:
Yahoo finance company description:
Cavium, Inc. designs, develops, and markets semiconductor processors for intelligent and secure networks. The company operates through Semiconductor Products, and Software and Services segments. It offers integrated semiconductors that provide single or multiple cores of processors with intelligent layer 2 through 7 processing for enterprise network, data center, broadband and consumer, and access and service provider markets. The companys products also include a suite of embedded security protocols that enable unified threat management, secure connectivity, network perimeter protection, deep packet inspection, network virtualization, broadband gateways, third generation/fourth generation wireless infrastructure, storage systems, wireless high-definition multimedia interface, cable replacement, and embedded video applications. In addition, it provides embedded Linux operating systems, development tools, application software stacks, support, and services. The company offers its products under the OCTEON, OCTEON Plus, OCTEON Fusion, FusionStack, NITROX, NEURON, NEURONMAX, Celestial, ECONA, LiquidIO, PureVu, and WiVu trademarks. It sells its products to providers of networking, wireless, storage, and consumer electronic equipment directly or through contract manufacturing organizations and distributors. The company has operations primarily in the United States, China, Korea, Mexico, Finland, Taiwan, Japan, and Malaysia. Cavium, Inc. was founded in 2000 and is headquartered in San Jose, California.
The real challenge of trading is to identify the controllable factors and build into the trading process means to control what can be controlled. The markets will do what the markets will do whether I buy, sell, hold, or do nothing. At the end of the day, the only control I have is over the orders I enter. – Peter L. Brandt