Novavax

NVAX

Company. "Novavax, Inc is a specialty biopharmaceutical company dedicated to solving some of the world's most challenging health problems through research, development and commercialization of proprietary products focused on women's health and infectious diseases." (company website)

Buy. At the end of June when I bought Novavax, it looked like a good idea:

• Money had started flowing into NVAX instead of out
• The one-month moving average had turned upward instead of down
• Directional indicators had turned positive: strengthening trend (rising ADX), increasing buying pressure (+DI), falling selling-pressure (-DI)
• Share price had risen from about $4.50 to over $5 on several days of strong volumes

How could I lose?

In the meantime. Let me count the ways. After reaching a new high over $6, again following a day of very heavy buying, NVAX stalled out. Two days of selling brought it back down to around $5.25.

The smart thing to do would have been to sell when the directional indicator lines crossed, putting selling pressure (-DI) above buying pressure (+DI).

The smart thing to do would have been to recognize a disaster in the making when the stock sold off in mid-July with a really long lower shadow on the candle. But hope reigns supreme. That long shadow, after all, indicates that buyers stepped in and forced the price higher again.

And then, when the price neared $4, NVAX climbed back up to the 50-day moving average, which was still essentially flat. Alas, the average proved to be a strong resistance level, and NVAX marched downward for two weeks.

Sell. The smart thing to do would be to have sold at any of those signals of obvious distress. But I didn't do it. Rather, I waited until this week when NVAX reached another lower milestone at $3. I put in my sell order, but the order didn't execute. This morning when I saw good news on NVAX and the price started rising, I bumped up my limit thinking Hey, it's going up!

Considering that robust activity today, I intended to change my limit order to a trailing stop, but put off doing so while I read the New York Times. Alas, while I was reading, bids got to my limit and the order executed.

19-Aug-04 And a good thing my order executed. NVAX closed at $3.37 yesterday, and my price ($3.50) was only 4¢ below the day's high. Methinks I was lucky to get out at that price.