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LivePerson Buy?

11/10/10 08:42:52 AM
by Koos van der Merwe

LivePerson Inc. has given me a buy signal, but fundamentally, I simply do not understand why.

Security:   LPSN
Position:   Buy

LivePerson is an Internet company where people seek advice from experts on any business or personal problem they may have. With the incredible popularity of Facebook, and the growth of network discussion in a shrinking global society, it appears to be natural for people with problems, whether business, financial, social or otherwise, to look for experts all over the world to assist them with their problems. With the dramatic growth in the share price of NetFlix, a company that offers movies through the mail and over the Internet, I have to wonder whether speculators are not looking for anything or everything that offers a similar pattern.

FIGURE 1: LPSN, DAILY. Here's a long-term chart showing growth.
Graphic provided by: Omnitrader.
Figure 1, a long-term daily chart, shows how the price has moved up from a low of $1.19 on October 12, 2008, to a high of $8.99 by April 26, 2010, an increase of 655%. Why? Fundamentally, profits must be good, and there must be a great many people with problems out there, who are prepared to pay well for advice given over the Internet.

FIGURE 2: LPSN, DAILY. Here's a shorter-term daily chart showing the current buy signal.
Graphic provided by: OmniTrader.
With Figure 2, looking at the same chart but over a shorter time scan, we can see where the vote line of the red-green strategies have given a buy signal, a signal confirmed by the relative strength index (RSI) volume histogram and stochastic RSI cycle indicator. Eyeballing the previous buy signals, we can see how profitable the signals were, using the Vervoort trailing stop as a sell signal.

The stock appears to be one to trade, although as an investment, I must admit it has proved highly profitable. You may want to consider it for your portfolio, but do keep your stops close.

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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