Alloy Inc. (ALOY)

Company

"Alloy, Inc. is a leading merchandising, media and marketing services company catering to the youth audience. In addition to owning several of the strongest consumer brands in the teen market, Alloy, Inc. owns three major franchises specializing in youth, multicultural, and promotional marketing." (company website)

Buy

28-Dec-04. Alloy broke out above the 200-day moving average in early December and has been skyrocketing ever since. After peaking near $7.50 a week ago it has been consolidating just below $7. This puts it above the previous 12-month peak reached in June (see sidebar).

ALOY has come very far very fast. I'm counting on the end-of-year rally to push it up a bit more before it pulls back. But the trend is still strong (ADX) and money flow (CMF) is also strong. Nevertheless, I will have to watch it very closely lest I get caught out.

Sell

18-Jan-05. A profit, even if small, is always better than a loss. I decided to sell today when I saw that ALOY opened up from last Friday's nice rally but then began to fall. I see just too many signs of weakness and too few signs of strength in the chart.

On the strength side, there is the fact that buying pressure (green +DI line) has picked up again, and the slowing of price momentum (PPO) has leveled off.

On the other hand, Friday's nice rally was still on low volume; relative strength has been falling since the beginning of the year (RSI); and, although it looked like ALOY was about to stop being over-sold (StochRSI), today's session dimmed that hope.

So, I'll take the money and plow it back into something that looks more promising at the moment.