Hartmarx

HMX

Company. "Hartmarx produces and markets business, casual and golf apparel under its own brands including Hart Schaffner Marx, Hickey-Freeman, Palm Beach, Coppley, Cambridge, Keithmoor, Racquet Club, Naturalife, Pusser's of the West Indies, Royal, Brannoch, Riserva, Sansabelt, Barrie Pace and Hawksley & Wight.... The Company's broad range of distribution channels includes fine specialty and leading department stores, value-oriented retailers and direct mail catalogs." (company website)

Buy. I bought the first of two lots of Hartmarx at the end of June after four days of higher prices followed by a collapse on heavy volume that wiped out almost all the gains for June. I was inspired to buy, however, since HMX opened well up over the previous close, perhaps buoyed by news that it would buy Exclusively Misook, maker of women's clothing.

Optimism was short-lived, however. The next day HMX opened higher but sank; the day after that it opened still lower and continued down. Yikes!

Then HMX announced stellar earnings and made optimistic forecasts for the remainder of the year. I bought a second lot of shares.

Sell. Hartmarx shares have been rising steadily for the past two weeks amidst general deterioration in the market. Nevertheless, I decided to sell today:

• Yesterday's session was decidedly mixed: the candle has a long lower shadow. Maybe this was profit taking, maybe it was indecision.
• Although HMX opened up again today, it had a hard time holding the gain.
• At $7.68, HMX is almost 18% above the 50-day moving average and over 40% higher than the 200-day moving average.
• The price has been higher than the 50-day moving average for almost two months.
• HMX has more than doubled in price over the past year (see sidebar).

I consider all these things as signs that Hartmarx is due for a short-term pullback. For the longer term, it seems likely that Hartmarx will rise some more. After all, the trend is still very strong (rising black ADX line), selling pressure continues to fall (red -DI line), and buying pressure is strong (green +DI line). Average daily volume has about doubled over the past two months.

If my prediction proves correct, I'll jump back in after the pullback.