Gerber Scientific (GRB)

Company

GRB 1-year chart GRB 1-year chart

"Gerber Scientific, Inc. is a leading international supplier of sophisticated automated manufacturing systems for sign making, specialty graphics and packaging, apparel and flexible materials, and ophthalmic lens processing. Headquartered in South Windsor, Connecticut, the Company operates through four primary businesses: Gerber Scientific Products, Spandex, Gerber Technology and Gerber Coburn." (company website)

GRB 6-month chart
GRB 6-month chart

Sell short

2-Sep-08. Gerber fell precipitously in early August when it confirmed guidance for the year and cautioned about a weak first quarter. When earnings were reported, GRB missed Expectations by 8¢. That led to a big sell-off and a further drop in price since then, trading as low as $8. It is below both the 50-day and 200-day moving averages, and the PPO line is diverging again after crossing and re-crossing the signal line. I believe it will continue to trade lower, and I have sold short.

  • Price momentum (PPO) — crossed above and then immediately re-crossed below the signal line and is now diverging

Based on technical analysis, MarketEdge calls GRB an "avoid" in a "strong downward trend."

Buy to cover

gain Bottom line
2%

10-Sep-08. Timing is everything. Although I still made a small profit on this lot of GRB, I left a lot of money on the table by holding the short position too long (cf CTGX that I covered too soon). At one point GRB traded below $8, which would have netted an 11% profit; not jumping at that point cost me 7%.

The downtrend is still very much intact, but it looks like the current down-cycle is coming to an end. Perhaps I can jump in with another short at the next down-cycle.