Lightpath Technologies (LPTH)

Company

"LightPath Technologies Inc. is a recognized leader in optical solutions for medical, industrial, communications, defense, test and measurement applications. Since 1985, LightPath has built a strong portfolio of optical components and technologies that serve these industries. LightPath not only supplies components, but also offers the ability to combine optical elements into a complete assembly, providing full engineering support for both optics and mechanics." (company website)

Buy

06-Nov-06. Earlier in the year I dipped a toe into Lightpath, soon got cold feet, and bailed out for a wee profit. And a good thing it was too, because in September LPTH got down very close to $3. The downtrend appears to be broken, so I'll give it another try.

• Price momentum (PPO) — sudden spurt in October
• Trend (ADX) — very strong
• Money flow (CMF) — money flowing out of stock
• Relative strength (RSI) — above neutral, strengthening
• Volume — still lightly traded but enormous volume on breakout

Sell

15-Nov-06. Whoa! Who attached LPTH to a bungee cord? Lightpath filed its quarterly 10-K report yesterday, and it began gyrating as soon as the market opened this morning, before a single item crossed the wire.

When LPTH hit a high of $6.23, that brought the trailing-stop up to $5.48, so the stop-loss order was triggered. Fortunately, the swings were so wild that by the time the order executed buyers were lining up for bargains, and I got out with a small profit.

Revenue up 62% from year-ago. Gross-margin up 4% over previous year. GSA up marginally. Expect sales to "to generate a year over year increase in revenues." But somewhere in there, The Street apparently found bad news. Go figure.

In any case, buying pressure (+DI) was falling, the trend (ADX) was weakening, strength (RSI) was flagging — it's probably time for a good correction anyway.