Name: Gilat Satellite Networks (Nasdaq: GILTF)
Last price: $12.50
Support to watch: $12.50
Resistance to watch: $14
Chart courtesy of Stockcharts.com
Gilat Satellite share investors have experienced the same “thrill” as investors in NICE-Systems (Nasdaq: NICE): a rapid, steep drop, which did not permit an orderly, well-considered exit. The share is now left hanging in the air, with neither support below nor nearby significant resistance that can be set as a target for a rise. It is therefore impossible to suggest a long-term trading strategy for the share, and we therefore confine ourselves to guidance for intra-day monitoring.
The share can be traded by riding the trend that develops during the course of a day’s trading. This strategy is particularly suitable for someone considering purchasing the share at current prices for non-technical reasons. Buying positions can be tried on the basis of signs of support or rises, or liquidated if the appropriate technical signals appear.
The intra-day support level is $12.50. Signs of support at this level emerged on both Monday and Wednesday. The share should therefore not be bought below $12.50 until new buying signals appear, while a buying position should be hedged with a sell order below $12.50.
Three resistance levels lie on the upside: $13, $13.50, and $14. A move above each of these will constitute a signal for further rises, while any resistance that is broken through in a downward direction will be tested as a support level. The most significant resistance level is at $14, where the share has hovered several times, with stiff resistance being shown there on Tuesday. Selling below this level and buying above it is therefore a reasonable tactic.
In sum, those wishing to buy the share can attempt a long position above $12.50, hedged below this level. A move above $13 or over $13.50 will enable the hedging order to be raised to just below any resistance broken through. A move above $14 will allow the long position to be enlarged, while raising the sell order below this level.
This review was written before the opening of Thursday trading in New York.
Published by Israel's Business Arena on March 22, 2001