Gander Mountain (GMTN)

Company

"Gander Mountain is a leading specialty retailer that serves the needs of outdoor lifestyle enthusiasts, with a particular focus on hunting, fishing, camping and boating. Gander Mountain provides a unique retail experience founded upon our 'We Live Outdoors' culture and theme. Our stores offer broad and deep assortments of competitively priced outdoor equipment, accessories, apparel and footwear, combined with a unique store environment and an emphasis on customer service based on our store associates' extensive product knowledge and outdoor-related experience. At the end of September 2006, the Company had 103 Gander Mountain outdoor lifestyle stores in 21 states - Arkansas, Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Tennessee, Texas, Virginia, West Virginia and Wisconsin." (company website)

Buy

27-Sep-06. In August, the stock of Gander Mountain reversed a steep slide that began in May (see sidebar); it has clearly broken through the trend line. However, I fear the timing is way off. My order was submitted a few days ago in hopes of catching a low price, but looking at the chart today, I may have caught it at the beginning of a retracement.

• Price momentum (PPO) — leveled off after a rapid increase, with hints of slowing
• Trend (ADX) — very strong, but buying pressure (+DI) is falling off
• Money flow (CMF) — starting to flow out of the stock after a period of inflow
• Relative strength (RSI) — steady strengthening over the past three months, but appears to be weakening
• Volume — average daily volumes are declining

Wow! After writing this pessimistic summary, I'm inclined to think the best thing would be to sell on any short-term rally.

Sell

31-Oct-06. After hitting a new high at $7.75, GMTN has held around $7.50, which isn't bad for a stock that looked as weak as this one did when I bought it. But I decided to sell today because it is only looking weaker: volume continues to fall; price momentum is slowing (PPO); the trend is weakening (ADX); relative strength (RSI) is weakening. The only encouraging thing in the chart is that money is flowing strongly into GMTN. It is not a good sign when fewer than 8000 shares have changed hands in two hours of trading — no liquidity!