Friday, November 02, 2007

SGMS - Scientific Games


This was the time horizon that initially led me to take a look at SGMS as possible short -- it was up huge since 2003 and appeared to be making a TRIPLE TOP the chart showed an inability to make a new high over a period of more than a year and momentum from the long trek up was waning, although the price was still sitting on top of the SINGER ENERGY EMA BAND -- when a long up move like this one begins to reverse it will usually be a slow process although eventually the stock could upon breakdown retrace down to the top of the previously established price channel.


SGMS has failed to take out the APRIL 2006 high at around 40...It appears that the previous attempt at a break out was a full retracement of the previous decline and that another leg down is possible now with support looming at the green upward sloping trendline... I was generally uninspired with the firms recent SEC filings and look for a possible miss in their earnings estimates to be released on NOV 1 2007. Among other things this company makes the computerized betting systems used at NASSAU OTB and has many lottery contracts. Analysts are expecting 28 cents a share in earnings this quarter.


Support at around 33.50 -- also, the ENERGY BAND is beginning to slope downwards, which usually means a further decline a counter trend rally then a resumption of the decline once price is trapped below the band...


On the SHORT TERM CHART we see that SGMS has pulled back after failing at its last attempt at taking out the APR 2006 highs around 40 dollars. It is trending downwards below the ENERGY BAND and most recently is trying to find support around the 35 dollar level before its earnings release...

***UPDATE*** -- SGMS misses earnings badly and stock drops five percent...Some analysts have downgraded while others remain constructive -- See Yahoo! Article

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