EPIQ Systems

EPIQ

Company. "EPIQ Systems is a national leader in the market for fiduciary management and claims administration providing an advanced offering of integrated technology-based products and services. Our solutions enable clients to optimize the administration of large and complex bankruptcy, class action, mass tort, and other similar legal proceedings." (company website)

Buy. Considering the number of bankruptcies in this economy, this should be a burgeoning business. Indeed, when EPIQ Systems reported earnings on 27-July, revenue was up 88% compared to the previous year, and the company earned 26¢ per share compared to 24¢ the previous year.

EPIQ turned up in my screen for making significant price and volume increases over the past five days. The trend is gathering strength (rising black ADX line). The 50-day moving average, after falling for the past months, has leveled off and begun to rise. MarketEdge says EPIQ is a "strong buy."

Although EPIQ got hammered in last Friday's bloodbath on the market, it held on to much of the gains for the week. That ought to count for something.

EPIQ has been trending down since February (see sidebar), but the low at the beginning of July may have been a bottom. I'm counting on it!

Sell. No guts, no glory! After being slammed last week, the markets treaded water on Monday, recovered nicely on Tuesday, and then treaded water again on Wednesday. Just when you thought it was safe to have hope again, Hewlett-Packard released its earnings report this morning, a week early, missing expectations. Going down!

I decided to sell EPIQ when I saw that it had gapped down from yesterday and continued to fall. I looked at the chart and set a stop-loss order to sell if EPIQ traded at or below the 1-month moving average (dashed line). It did, the order executed.

Buying EPIQ was making a bet that it had recently bottomed. When it failed today to hang onto the recent gains, I lost confidence in the bet. $14.50 is the level from which it descended in July. Although money flow was improving (CMF) and had even turned positive, selling pressure rose sharply this week, and today is the third consecutive day of selling. Maybe it's just consolidating. But maybe not.

I simply don't want to take the risk of an even bigger loss — not in this market. My portfolio is already weakened, and EPIQ was pricey at $15.