Why I'm Adding to Riverbed Technology

Everything I said 2 posts earlier about HDFC Bank (HDB) applies to Riverbed Technology (RVBD).

We have a latent gap much earlier in the chart; if the market implodes, buying anything long will be stupid; I am trying to thread the needle for an oversold bounce. Rinse. Wash. Repeat.


I was stopped out of RVDB last Thursday at $21.90; the stock is not much lower now but just above its 50 day moving average... so I'm going to purchase here at $20.80. $20.50 is the 50 day moving average, so I'll stop out below $20 in this case to give me some room. I'm taking RVBD back up to a 2% type of stake from 0.2%.

The gap? Just over $15... if $20 is breached, I'll probably be short this name assuming that gap fills. On a side note, Research in Motion (RIMM) continues to be weak. "Technology is safe" thesis is being hit now, as we predicted.

As always it is quite amazing how fear turns to greed and vice versa - very quickly. We're at S&P 875 which many are looking at as the line in the sand (I was using 880). Now we will see if reader Guy is correct in that a swipe below support to draw in the bears, before reversing up is the master plan. Or if we begin a free fall of panic selling.

Of course it 'feels' terrible to be buying anything right here since the propensity for the beginning of a "waterfall" type selloff could be right around the corner. So we'll see.

p.s. I said earlier I'd stop out of HDB at $91, not true thus far as the stock trades at $90.75. In Investopedia, you cannot sell a stock for 20 minutes after you purchase it. Hence I could not enter a stop loss until 20 minutes after. I am now just getting around to putting the stop loss order in, and the stock is already $90.75. So I'm going to give it leeway to $89.90 instead; if that hits - I'll be back out of the shares I bought this AM. (EDIT 12:05 PM - the $89.90 hit and I'm stopped out of HDB purchase of the morning; volume is low but they got me on price)

Disclosure: Long Riverbed Technology, HDFC Bank in fund; no personal position