Market Talk with Piranha is currently moving to its new home at 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!

Sunday, January 15, 2006

Sierra Health Services (SIE) Removed

…As you already know, Sierra Health Services (SIE) was removed from the Index this week with a 58% gain on MSW over fourteen months. The stock peaked at $41.48 for a top gain of 69% and closed at $41.05 last week with a 67% on the MSW Index. I am removing the stock for two reasons:

1. Its recent 2-for-1 split out of the $60-$100 run
2. The recent violation of the 50-day moving average.

I will note that it still has major support at the 200-d m.a. but I feel now is the right time to take profits. The support below dates back over two years so the stock can still rebound and move higher but sometimes it is better to take a profit than to hope to get out at the top. As a trader, you must act on that inner feeling from time to time, especially when a solid profit is involved.

Sierra Health (SIE) challenged the 200-day moving average on five separate occasions over the past 14 months but I never had the urge to remove the stock until now. As I mentioned above, it may gather itself during the current consolidation and move higher but I just don’t feel right sitting around during this late stage base while new leaders present themselves.

The only time I became concerned was back in September when the stock violated the 200-d m.a. intra-week but I left my emotions aside and decided to keep the stock until it violated a sell rule and closed below the moving average at week’s end. Also keep in mind that the market was going through a correction in September and the relative strength of SIE was better than most (even during the slide). SIE didn’t close below the line and the stock actually moved higher by 25% over the next several months on above average volume. The current relative strength is weaker than our new leaders so this may be foreshadowing of future performance.

As you look at the chart below, you will notice that the stock has been churning slightly above $40 and has met strong resistance near $41. If the stock did not split, I would give it more of a chance to finish the $60-$100 run but that is no longer the case so I am moving on. It’s now up to you to decide what you need to do.



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