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A Cup Of Security With Vasco Data

05/18/05 01:54:28 PM
by Koos van der Merwe

A cup is in the making.

Security:   VDSI
Position:   Accumulate

Vasco Data Security International design, develops, markets, and supports identity authentication products that reduce the risk of loss from unauthorized transactions. It achieves this by validating a person's identity using a one-time password and obtaining a legally enforceable digital signature, if needed, for financial transactions.

The company's products are currently used in a variety of applications including Internet banking and Internet brokerage, as well as e-commerce applications dealing with the web.

Figure 1 shows how the price has moved up strongly from September 2004, when it was $1.80, to reach a high of $9.12 on February 12, 2005. As shown on the chart, from that date it formed a cup, with its base at $5.95. This immediately suggests that should the price break above $9.12 in forming the handle, it would give a buy signal, with a target of $12.29 ($9.12 - $5.95 = $3.17 + $9.12 = $12.29).

Figure 1: A secure cup and handle in the making.
Graphic provided by: AdvancedGET.
The relative strength index is showing weakness, suggesting that the "handle" to the cup could take time to develop and even fall to test the resistance at $7.62 before rising.

Volume appears to strengthen as the price strengthens, and weaken accordingly when the price declines. This is a sign of strength, suggesting that as the price falls, sellers dry up.

Vasco is definitely a share to add to your watchlist for a buy when the price breaks above $9.12.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address:

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Date: 05/18/05Rank: 4Comment: 

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