Impco Technologies (IMCO)

Company. IMPCO supplies "solutions that support the use of clean-burning gaseous fuels for off-highway and on-highway engines.... The only full service company that provides tank-to-tailpipe range for on and off highway engines using LP Gas, Natural gas or LNG." (company website)

Buy. IMCO bottomed out in April at $1.76. In October, 2002, the stock made a new low at $2.24 and then got as high as $5 before retreating to the bottom.

In June, Impco stock broke the $5 barrier and immediately pulled back. When it broke $5 for the second time, it did so on very heavy volume, going from $4.50 to $6 in two days. I bought on the third day of heavy volume, just below $6.00.

IMCO got as high as $7.37 before pulling back again. Over the next nine weeks, the chart formed an ascending triangle (pink lines) never getting much above $6. It tried to break out once, on 28-Aug, but reverted after two days at $7 in a very tight range.

I had nearly given up on IMCO. The theory is that the optimum point for a breakout is between half-way and three-quarters of the way to the peak of the developing triangle. IMCO got all the way to the end before breaking out.

Sell. Although IMCO volume was much higher than average on the breakout, the stock seemed unable to get above $8 and stay there. When it closed at $7.85 yesterday, I considered likely scenaria:

• Tuesday was just "profit taking" — after a few days of consolidation, IMCO would continue climbing.

• Tuesday was the start of a "correction" — IMCO might continue to fall, perhaps to around $7.25 or a little higher, and then consolidate.

The close at $7.85 put my potential gains at just over $2 per share. I decided to take my profits. This morning, I placed a limit order to sell at $7.90 It was just below that at the time, but had been as high as $7.92 earlier in the session.

Just about one-third of my shares sold at $7.90 before the bears took over. At the close of trading, my order was fourth in the queue.

I plan to put the rest of the shares up again tomorrow. Although there is lots of evidence to suggest that the price may go higher in the future — -DI line still falling, ADX line rising, Chaikin oscillator still high (but turning down) — my bias right now is to take profits when I can. I've done very well in the market so far this year, and I don't want to blow it by becoming overly confident or aggressive (i.e., greedy).