Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Tuesday, November 30, 2004

ELOS, Bad News for a Bad Day

….ELOS broke down hard today on news that the FDA will delay approval of its cellulite product. The stock was also downgraded by Stephens Inc. I don’t pay much attention to Wall Street investment firm’s analysis nor do I believe anyone in this community should either. I mean, these same firms were still recommending Enron as a buy after it had fallen by more than 50-70% back in 2001. It started to collapse in the upper $60 and was in the teens several months later as several firms were still posting “long-term buy” and “market-perform” ratings. Anyway, the point is to stick to the price and volume action and block out all noise from outside “talking heads”.

Today, ELOS fell over 27% or $10.15 on volume 10x’s the average daily volume. It closed below $30 at $27.05. As I review the daily and weekly chart, not surprisingly, the stock is still well above key long term trend lines such as the 50-d and 200-d moving averages.

We sold out of ELOS on two separate occasions in the past several weeks as we highlighted on this website. As I noted, I always try my best to sell into strength rather than get caught in the type of gap-down ELOS had today. For more on “Gap-downs”, please visit our free Philosophy and Education section. Price and volume allowed us to sell out of ELOS two weeks ago as this quote states from an earlier blog post:
“Recently I see ELOS advancing quickly but the volume the past 3 days has been weaker than previous days.” – November 11, 2004

It should be interesting to watch ELOS over the coming days and weeks. Will the stock with excellent earnings and sales be able to overcome this setback or will the stock retreat into a long term base?

Stay posted to my daily and weekly screens to see if ELOS shows up as a stock rising or a red flag.

Piranha

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