Longview Fibre

LFB

Company. "Longview Fibre is a major manufacturer of value-added corrugated and solid-fiber containers, handle shopping and merchandise bags, and other paper products. The company operates one of the largest pulp-paper mills in the world at Longview, WA; 17 converting plants in 12 states; a lumber plant; is a leader in recycled-content paper packaging; and owns over 584,000 acres of timberlands managed for Sustainable Forestry in the Pacific Northwest." (company website)

Buy. I bought two lots of Longview Fibre in the second half of June after a period of high-volume price rises. In hindsight I saw that buying pressure was falling (green +DI line), but decided to hang in on the hope (always the hope!) that LFB would consolidate above $14 and then advance again. What I didn't count on was the stock would return to $12 before climbing again.

Sell. LFB has been climbing steadily since the beginning of September. After a brief stutter-step the third week, it resumed with four consecutive days of solid gains with volume. Since LFB has been hugging the upper Bollinger band for about a month I began to consider protecting my gains, and after yesterdays indecisive trading session I decided to sell if the price fell to $15.50.

The LFB chart still looks quite strong and promising. But there are two main factors that drove my sell decision. First, LFB is trading quite a bit above the 50-day moving average; statistically it is due for a pullback. Second, October is historically an unkind month with a dip in the market after the first week (see sidebar).

In any case, I still hold a third lot of LFB bought at $13.20, well protected from a correction.