Some very interesting setups and breakouts

The HDTV and VOD (video on demand) sector is really perking up. You've probably heard about this being the next big thing and I tend to believe it. Is now the time to get into these stocks? Since I don't have the ability to call these CEO's and ask them personally, I have to rely on the charts and let them speak to me.

First, check out Silicon Image, Inc. (SIMG), which is pictured above. The weekly is above the daily chart. I've been reading more Jesse Livermore lately and he always emphasizes buying at pivot points. SIMG just broke through a major pivot point recently, with big time volume to boot. The overhead resistance at 12.20 has been pretty strong since May 2005. The price is now testing the breakout point on smaller volume. If it holds on weak volume I think that I'm going to jump on board. The balance sheet is solid and earnings are gaining momentum. Another thing going for SIMG is the fact that it went public in the last 8 years. Willam O'Niel has found that most big winners have made their largest moves within the first 8 years of its IPO.

For some reason I went to the Yahoo message board for SIMG. The first post I read was some dude bragging about shorting SIMG at 12.96. Wow, does this guy have any clue whatsoever? It has to be a bullish sign though.

Speaking of shorts. The next stock I've been watching, which has almost 26% of the float shorted, is Sigma Designs, Inc (SIGM). (No I didn't find it because of the similar ticker.) These guy's fundamentals are really improving and if VOD really takes off, SIGM will be a huge beneficiary. The chart is working on the right side of a base and might be in the early stages of forming a handle. This will be tough to buy at the correct point because I think the large short interest will cause an explosion in price when(and if) it finally does breakout. This reminds me of another piece of advice Jesse Livermore gave. "Don't anticipate market moves with your hard earned cash." It is important to be patient and wait for the proper pivot point. It is ok to anticipate moves in your head, but that is it. What I think will happen is that it will form a handle and move, on light volume, down to the gap at 12.50. It is there that I think the breakout will begin. I intend to catch that breakout.

Finally, there is SeaChange International, Inc. (SEAC) . It is in the same sector and has a very similar chart. I'm looking for SEAC to react in a similar manner to SIGM. I'm looking for it to consolidate on weak volume and fill the gap between 8 and 8.25. I want to catch the breakout.