Clean Harbors Inc

CLHB

Company. Clean Harbors is "North America's leading provider of environmental and hazardous waste management services. With an unmatched infrastructure of 48 waste management facilities, including nine landfills, five incineration locations and seven wastewater treatment centers, the Company provides essential services to more than 30,000 customers, comprising a majority of the Fortune 500, thousands of smaller private entities and numerous governmental agencies." (company website)

Buy. I bought Clean Harbors the day after it made a big jump on much heavier-than-normal volume (the high that day was almost $2 over the opening price). The jump took it solidly above the 50-day moving average and drove the trend strength indicator (black ADX line) up convincingly.

It was natural that the stock would pull back a bit after such a big jump, and it did. But it soon recovered momentum and continued to a new closing high. Unhappily for me, CLHB then started downward again for three weeks. I would have jettisoned the stock except that it was still above the 50-day moving average. Plus, there is a "typical" pattern that when a stock touches a Bollinger band (the wavy green lines) it rebounds to the other band. I was holding my breath that CLHB would do the same and carom off the bottom band toward the top. At the beginning of the week, money began flooding into CLHB (CMF). Great!

Sell. When Clean Harbors reported earnings yesterday morning before the market opened. I was completely faked out: although the company lost much more money this quarter than in the same quarter the previous year, the stock jumped up at the open and closed well up. But they did make reassuring noises about how they were going to do much better in future because they had restructured their debt, yadda, yadda, yadda.

Today CLHB opened up again, flirted with a retreat, then started to climb again. I decided to sell and lock in modest profits. I know, this looks like jumping ship just when it's leaving port. After all, it is near the one-year high (see sidebar), perhaps poised for a breakout. Why not just put a trailing stop to ride it on up but sell if the price falls back a certain amount? In a word: volume. The average daily volume of CLHB is about 42,000 shares, but that's because there are occasional spikes of huge volume. The average masks the fact that most days only a few thousand shares change hands. In case the price started to fall, there might not be a buyer at a reasonable price. Better to take advantage of a day when there's lively trading going on than risk having to liquidate at a much lower price.