Mark wanted me to take a look at a chart of Lifecell (LIFC). This stock has been on fire, up 115% for 2005, but that high volume break of the 50-day moving average has me concerned. I'd probably just pass on this stock for now but if I had to choose a side I'd short it with a stop above the 50 DMA. (I've sworn off of holding biotech stocks short overnight though!) Actually, the 20 DMA has been a better trendline for LIFC during this year's rally. So I might pay more attention to that average (the dashed green line, aka the middle Bollinger Band) than the 50 DMA. The 20 DMA gives a more bearish view of the stock than the 50-day...
wow, LIFC's down 9% already this morning
Mike,
Thanks for the chart. I shorted it yesterday after the both the Nasdaq and the stock turned bearish. I found LIFC from a screen created by Harry Domash (The Death List of High Risk Stocks and MSN Money - Doomed stocks to avoid at all costs). The screen is based on a series of articles in Barrons from the 90's and turns up stocks which have doubled in the last year but are overvalued by a number of measures. The problem with the screen is it includes results like GOOG, NTRI and ISRG, so its results are probably more likely to continue to run up in the short term, although most are down over the next year. So I've been periodically using it as a watch list, shorting when other indicators (at least to my amatuer mind) suggest it. The screen has turned up good shorts: WPTE, ENWV. I recently shorted VDSI at just over $10 based on the screen, but also took a nasty loss when CTHR gapped up more than 10% after dipping below the 50dma.
Mark,
I'm glad to hear that you caught this move lower in LIFC. I like the way you'e using that screen. IMHO, being overvalued isn't enout of a reason to short a stock. So waiting for some other indicators is very wise.
Hmm, I see LIFC is cratering on this news "13:10 LIFC LifeCell Voluntarily Recalls Product from One Tissue Recovery Organization". Makes you wonder who knew this was coming and when. And makes that gap down last week look real suspicious!