Mike Trienis'  Instablog

Any half-witted investor will consider the fundamentals of the company before even considering a potential trade or investment. The standard measurement of strength or weakness for a given company will typically consists of the following statistics:

• Market Capitalization
  
• Average Volume 
  
• Estimate Price per Share
  
• Price-to-earnings ratio
  
• Beta value   
• 52 week price range

These elements used in combination with financial news and quarterly calls are often the main force driving the stock price on any given day. The problem with all of this data it is almost always too much information to process and usually results in a very confused investor. Some important questions to ask yourself are: How do we determine which information is relevant at the appropriate time? And what can we do to differentiate between informed decisions over luck or randomness? 

Technical indicators are one method that investors often use to scale down the flow of information. It is a way to summarize or translate the raw information into a form that can be easier to interpret. Although they are only indicators, which means that they only "indicate" and do not serve as any kind of guarantee.

Graphical overlays such as Bollinger Bands and Candle Sticks can be useful in identifying support / resistance prices and short term trends respectively. On the other hand, there are technical modules such as the Williams %R,  the KDJ, and the Relative Strength Index, which are often used to identifier stocks that are overbought and oversold. The important question is, when to use these indicators and at what time. From my experience, it seems that most stocks tend to have higher activity around their quarterly calls. These are good opportunities to take advantage of the volatility that might arise due to misalignments with independent analysts. 

The following graph is an illustration of a true positive from a KDJ indicator. Here we have a six month price history for Synaptics (SYNA). Between the months of June and August we notice that the K, D, J lines begin to converge and the stock price was dabbling around its 52 week high. From this point, it only takes a couple bag segments of news for the stock to take a drastic downward spiral as it did on July 30th.

The smart phone industry touches on many important technology sectors and each of these sectors are integrated in such a way that they contribute to an overall product and service.

The most fundamental differentiating piece of hardware in the smart phone is the touch screen. Synaptics (SYNA) is a leading developer of interface solutions. One of their major products is the ClearPad, which has recently been extended to recognize up to 10 simultaneous finger touches. Although hardware is only part of the story, smart phone users require a high level of simplicity in order to be functional in the mobile setting. It is this combination of software and hardware which leads to a very successful product.

Apple (AAPL) is largely responsible for a more interactive and dynamic phone experience. It is this interactivity which has helped fuel the insatiable demand for content at any place and at any time. Akamai (AKAM), which is an expert in content delivery will surely benefit as individual users require an increasing appetite for online media from the mobile industry.   



Disclosure: Long AKAM, Long SYNA, Short AAPL, Short IDCC.