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, December 13, 2005

Another Triple Digit Gainer on MSW

…Listed below are the appearances Lamson and Sessions (LMS) has made on the MSW weekly screens, now titled the MSW Index. As you can see, LMS has made a total of 13 weekly screens since August 2005. The stock was removed during the month of September to protect against further losses as it slid lower. As September started to fade, the stock picked up steam and gained strength so we added it back to the weekly screens and have kept it there ever since. From October 1, 2005 until November 5, 2005, the stock only moved $1.50 or 8%. It wasn’t until late November when the stock started to make the advance that we had been anticipating since early August. The patient investor has been rewarded very handsomely if they kept their cool and only sold on major red flags, similar to the ones in September. Since October, the stock has not flashed any sell signals and has been positive across the board.

Notice how we originally covered the stock at prices between $13 and $15 in August and then removed the stock from the screen, only to bring it back at higher levels in October. Let this serve as an important lesson that you can buy stocks at one level, only to be forced to sell and then buy them again later at a higher level to make the anticipated profit. We did not think twice about bringing the stock back onto the screens above $18 because our original analysis was still the same. In August, we were off a bit with our timing but had the right stock. We protected ourselves when it dropped and grabbed it again when it showed strength. It is so important to play the odds while investing because it is the only way you can continually succeed in the market.

Last night (12/12/05), the stock closed at $30.80, a 103% gain from the original weekly screen on August 13, 2005. Using the later weekly screen entry point of $18.32, the stock has still made a 68% gain since October 1, 2005 (this comes in less than three months). We confirmed the rally on October 22, 2005 when the stock closed at $18.19, giving us a gain of 69% during this stretch. I noted on the most recent weekly screen to start protecting profits in this stock as it becomes extended. The area of $28 will provide some support and can be used as a sell point or you can start to cash in partial profits at current levels.

If you originally bought 100 shares at $15.16 ($1,516.00) and sold for a 10% loss ($151.60) and then repurchased 100 shares at $18.32 9 ($1832.00) and sold last night at the close ($30.80 or $3,080.00), you would have realized a gain of $1,096 but would have a win/loss track record of 50%. One winning trade and one losing trade but a profit above 50% on the original stake invested (NOTE: taxes and commission have not been included in the calculations). This is how you play the odds and what I mean by saying “cutting losses short” and “letting winners run”. Many times this scenario will happen with different stocks but in this case it happened with the same stock. Below is the record of the stock on our weekly screens, showing you how any member of MSW had numerous chances to capitalize on the recent advance in LMS.

MSW Weekly Screen Appearances:
8/13/05: 15.16
8/20/05: 13.96
8/27/05: 14.40

10/01/05: 18.32
10/08/05: 19.83
10/15/05: 18.13
10/22/05: 18.19
10/29/05: 20.00
11/05/05: 19.88
11/12/05: 21.35
11/19/05: 22.24
12/02/05: 27.41
12/09/05: 30.14

12/12/05 - $30.80

Piranha

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