Online Advertisers Show Bottom Signs
Online advertisers are showing signs
of a turnaround, but intermediate-term traders have a long wait before these
stocks offer the kind of technical signals worthy of a momentum long trade.
24/7 Media
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PowerRating) rose 2 3/8 to
15 3/4 on more than twice its usual trade. The online advertising company said
Thursday it bought Website Results, a privately held developer of Internet
marketing technology, for $95 million in stock.
You can see further signs of
institutional buying in this area by looking at Internet advertiser DoubleClick
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PowerRating), which rose 2 3/4 to 40 5/8 on Thursday. Over the past three
sessions, the stock has gained 36% from its Aug. 21 low on heavy volume.
These are promising signs. However,
both stocks, which are trading well below their 200-day moving averages, must be
presumed under the weight of heavy overhead supply.Â
At bare minimum, as an
intermediate-term trader, I would insist that they produce superior six-month
relative strength ratings and overcome both 200- and 50-day moving averages
before considering them for entry points. Chances are, you’ll still be able to
find more attractive momentum plays among stocks that are closer to their
all-time price highs.Â
All stocks, of course, are risky. On
any new trade, be sure to limit your position size and set a protective price
stop where you will sell your buy or cover your short to protect yourself
against severe losses. For an introduction to combining price stops with
position sizing, see my lesson,
Risky Business