OrthoLogic Corp (OLGC)

Company. OrthoLogic is "a pure-play orthobiologics drug-development company focused on commercializing several potential therapeutics comprising its Chrysalin® Product Platform. Our vision is to become a worldwide leader in fracture healing, spinal repair and orthopedic soft tissue repair." (company website)

Buy. After trading bottoming out at $3.25 in May, OrthoLogic climbed to $5.47 in July, then pulled back to just over $4.50. In mid-September, it made a quick jump from $5 to $6. When it jumped again in early October. I bought at $6.75.

OLGC looked like a safe bet: Both the September and October jumps had been on much heavier than average volume. The ADX line was rising sharply, indicating a strong trend.

Sure enough, by the end of October, OLGC reached a new high just under $8. Woo-hoo!

Unfortunately, that new high was on a down day, and OLGC pulled back sharply. Not to worry, I thought, it's 'resting'. Indeed, OLGC did recover to above $7 again, and then went basically sidewise for a while.

Sell. I decided to sell to cut my losses. The OLGC chart shows pretty clearly that the trend is down. Selling pressure (the red -DI line) is now above the +DI line and is rising, and the ADX line is rising. Translation: the selling trend is getting stronger.

It was entirely reasonable to believe, until the beginning of December, that OLGC would trade sidewise for a while then rise again. That happens. But the -DI line crossed over the +DI line, and the +DI line continued to drift lower. At that point I could have still made a small profit, but hope springs eternal.

True brain failure occurred on 9-Dec. On that day, OLGC made a big move downward, closing below what I had paid six weeks earlier. The next day was another big down day. The coup de grâce came on 12-Dec when OLGC gapped up at the open but closed even lower than the day before. By this time, the -DI line was clearly on top and the ADX line was already rising (strengthening selling pressure).

A week later, I have finally moved from denial to acceptance of the fact that, at least for the time being, OLGC isn't going anywhere but down.

Not to put too fine a point on it, I have snatched loss from the jaws of profit.

The issue I haven't come satisfactorily to grips with is this: it's not unusual for these stocks to make pretty steep pull-backs, sometimes giving back one-third or even one-half of a recent gain, but the problem is differentiating between a pull-back that will be followed by recovery and one that is just the beginning of an even greater slide. Damned if I can tell the difference!