Bio-Imaging Technologies (BIT)

Company. Bio-Imaging Technologies manages medical images in clinical trial for pharmaceutical, biotechnology and medical device industries. (company website)

Buy. BIT looked like a rocket right after launch. The price was rising steeply in jumps, each day higher than the previous. Woo-hoo! The ADX line was going up and to the right. The Chaikin oscillator line was going up and to the right. How could this not be right?

I don't know what happened in July! For three days in July BIT retreated by leaps and bounds, getting as low as $5.10 on the third day. Then it reversed course and advanced by leaps and bounds for three days, recovering the loss and then some. No news crossed the wires on BIT. Did somebody just get up cranky for a couple of days?

Sell. After reaching $8.00, BIT started to drop a bit — no surprise. Yesterday, the day before the earnings report, the price started to tumble, but on very low volume. Fearing that someone, somewhere, knew something about forthcoming earnings, I put in a sell order at $8, hoping someone would buy at market. No such luck. Meanwhile, I watched like the proverbial hawk, having decided to bail if the stock reached $7.50.

Later in the session, however, the price recovered and got as high as $7.90 at the close. I replaced my sell order with a stop-loss order for $7.50 as a precaution against the next morning's announcement. If earnings were bad, and the stock plummeted, I would still be happy with $7.50. If earnings were good and the stock took off, I could simply raise the stop-limit.

Before the market opened this morning, Bio-Imaging released earnings: the top line grew 22% and operating income grew 38%, but the bottom line was constant. The number of clients and projects declined slightly, "primarily due to the sales and marketing efforts being focused on larger clinical trials."

Clearly that wasn't what The Market wanted to hear, and the price began to fall. My position stopped-out at $7.50, still a tidy profit. Frankly, after what happened in July, I had little enthusiasm for further risk with BIT. I've had quite enough volatility with this one, thank you.