Helen of Troy (HELE)

Company

HELE 1yr
HELE 1-year chart

"Helen of Troy Limited is a leading designer, producer and global marketer of brand-name personal care and household consumer products. The Company's personal care products include hair dryers, curling irons, hair setters, women's shavers, brushes, combs, hair accessories, home hair clippers, mirrors, foot baths, body massagers, paraffin baths, liquid hair styling products, body powder and skin care products. The Company's household products include consumer product tools in the kitchen, cleaning, barbecue, barware, storage, organization, garden, hardware, trash and automotive categories." (company website)

HELE
HELE 6-month chart

Sell short

Helen of Troy got a boost from the recent announcement that it will be added to the S&P 600 index after the close of trading next Monday. The high volumes, I believe, represent buying based on the index. The downtrend in the chart, however, is unmistakable. It is testing the 50-day moving average, but when the euphoria of from the current rally dissipates, I expect the downtrend to reassert itself. This is one case where I am discounting the PPO indicator.

  • Percentage price oscillator (PPO) — above the signal line and diverging
  • Volume — very high following news of inclusion in S&P 600.

Based on technical analysis, MarketEdge calls HELE a "short candidate" in a "strong downward trend."

Buy to cover

gain Bottom line
-24%

[EXPLETIVE DELETED].

I badly misjudged this stock: I missed the timing of institutional buying; I ignored my main indicator PPO; I didn't cover when I should have. Even after taking a second look at the situation, I decided to ride it out — the price rise was just "too good to last," I said to myself, "it has to go down again soon, reducing my losses." Yeah, right!

Even as today's trading session got under way, I thought I had lucked out. HELE opened substantially lower, and at the time I checked it had gotten near yesterday's close, but was pulling back again. I sighed with relief and went about my business. When I checked in again a few hours later, the market was in a frenzy of enthusiasm over the Fed's announcement of a trillion dollar injection into the mortgage and credit markets. HELE was surging again, and I decided I simply could not let the losses accumulate even more — I bailed.

It is with a great deal of chagrin that I look at the chart and realize that if I had bought instead of selling short, I'd by up $3000 instead of down $3000.