La Quinta Corp (LQI)

Company. La Quinta has "more than 330 Inns and Inns & Suites in 33 states, [and] La Quinta® is a leader in mid-priced hotels." (company website)

Buy. I bought La Quinta last October after a two-month steady climb from around $5. In late September, LQI made a nice jump up at a time when many other stocks were taking a dive then consolidated a bit above $6. The ADX line was rising nicely, selling pressure was falling (red -DI line) and buying pressure seemed stable (green +DI line). Apparently I either failed to notice or chose to ignore the falling Chaikin oscillator.

Real trouble set in in November when LQI stock plummeted from a high of $6.63 down to $5.55 in the space of a week. I took comfort from the enormous volume on the up-day that immediately followed that low.

Sell. Last Friday LQI gapped up to open and then continued to rise even more on heavier than normal volume. I decided to sell this morning when LQI was downgraded by an analyst and the price opened lower. At current prices, LQI has risen nearly 30% without a major correction, and earnings are due out this week.

My decision may reflect an excess of caution. After all, the price is not much lower than the new high set last week, and there have been two weeks of solid price rises on decent volume. That makes me think that Friday's gap is not a sign of exhaustion. But I am acutely aware that the typical pattern is for stocks to dip in January, and that hasn't happened yet. Also, the fact is I've done extremely well so far this month, and I'd not like to see those gains dribble away.