Transworld Entertainment (TWMC)

Company. "Trans World Entertainment Corporation is one of the largest specialty music and video retailers in the United States. Founded in 1972, the Company currently operates nearly one thousand stores in 44 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, and operates a retail Web site at www.fye.com. Its stores are divided into two categories: mall-based and freestanding. Trans World's national mall-based portfolio is now united under the brand name FYE (For Your Entertainment); the portfolio also includes select Saturday Matinee movie stores. Freestanding stores include Coconuts Music & Movies, Strawberries, Spec's and Planet Music." (company website)

Buy. Trans World Entertainment had been climbing steadily from a bottom at $2.30 in March. I bought, as usual, after it broke the $5.00 barrier.

The day after I bought was something of a white-knuckle day, inasmuch as the price was all over the chart, ranging from $5.09 to $5.79 before closing at $5.15, just 4¢ below where it opened. More than ten times the average number of shares changed hands that day!

The following day TWMC gained 16% to close just under $6.00. Whatever nastiness the previous day had been about had obviously been settled.

Sell. Earlier this month, TWMC hit another new 52-week high of $6.86, but on a down-day. This was not a good omen. The indicators were not encouraging: the directional indicators (+DI and -DI) threatened to cross, and the Chaikin oscillator fell below zero. Furthermore, although the price had been going up, the volume remained low, supposedly a sign of weakness.

Yesterday I put in a trailing stop order to sell if the bids fell more than 8%.

This morning, the trailing stop order activated as a market order, and my shares sold for $6.24.

Another learning experience. This gave me another lesson in the school of hard knocks about trailing stop orders. TWMC trades on the Nasdaq exchange, where stop orders are activated by the bid price. Although my top activation price was way down at $6.06, the order was fired off by an outlying bid during early morning, low volume trading. This reinforces my conclusion that trailing stops are not a good technique to use with most of the stocks I trade in. The results are just too unpredictable under low volume conditions. During yesterday's turmoil I set several trailing stops; after TWMC sold, I cancelled them all!

What I need is the ability to set a stop-limit order based on actual trading price or maybe even offer price. Unfortunately, Ameritrade doesn't offer that functionality. They do offer a feature called "market triggers" (still in beta test) but the one day I tried to define a "change greater than -X%" the trigger was pulled when I least expected it. Apparently their logic and my logic are not the same.