Monday, January 23, 2006

NTRI Follow-Up and MTH

Today was a relatively quiet day in the market, which isn't surprising considering the sell-off last week. I see the major media wasted no time in declaring that, since the market was actually up 21 points today, we were "Back to Bullness" (that's the top headline at MarketWatch). I'd suggest a different eight-character word beginning with "Bull", but I don't have any sway at CBS.

I wanted to follow up on a short suggestion I made on January 12 regarding NutriSystem (NTRI). Well, so far, so good. Indeed, unless the stock blasts back above $46 unexpectedly, I nailed this thing 100% on the dot. Take a look:

I have another short recommendation for your consideration - Meritage Homes (symbol MTH). This stock has already fallen a long way - about 40% since August of 2005. But it has formed a gigantic, textbook-perfect head & shoulders formation. Should it break the neckline at $57, traditional measurements in technical analysis target a descent to $17.50 (!). Here's a close-up of the chart:

I received a ton of emails and comments on Friday about my "Victory for the Bears" posting. Many questions, too, were sent along. I'll try to answer these in the coming days. Thanks for your attention!


Anonymous said...

Ok so now that I have a profit in NTRI, thanks to your post. How do you manage it. Do you behave like Barry
Bonds or do you behave like Ricky Henderson? Seriously, I find that I do a good job at letting my loser's stay in the account far too long and don't manage the winners very well either. Your thoughts would be appreciated.

Tim Knight said...

I don't know about either of those baseball players......all I can say is this: let NTRI run for now. A fairly conservative stop-loss on this is 45.11. But if this stock starts falling, there really aren't a lot of areas of support on the way down.