"Commerce without honor is theft."

-- Christina Nikolov

Date: January 02, 2003

Opinion: Bearish

Current Price: $33.53

Target Price: $26.46

Commentary:

After rising more than 130% between October 1st and December 2nd, Adtran Inc. (ADTN) settled into a trading range between $30.40 and $34.34. Since this sideways price action looks very much like a double top, you might want to use the current strength as an opportunity to swap long positions for short positions.

Adtran is overbought on a daily and weekly basis. (see charts #1 and #2). Meanwhile, the stochastic oscillator on the weekly chart seems to be in the early stages of a new downtrend. (chart #2) To make matters worse, the shares traced out a double top on the daily chart over the past month (see chart #1)

Our minimum downside objective for this pattern is $26.46 over the next few months. Unfortunately, ADTN's options tout a high premium. That said, if you are looking for an option to trade, we strongly advise that you purchase the more conservative August 35 put (symbol: RQATG), which is currently offered at $6.20.

.



Chart(s):

1) Adtran Inc. (ADTN) Six Month Daily Chart

Click the Chart for an Enlarged View

2) Adtran Inc. (ADTN) Three Year Weekly Chart

Click the Chart for an Enlarged View