Matrix Service Company (MTRX)

Company

"Matrix Service Company provides general industrial construction and repair and maintenance services principally to the petroleum, petrochemical, power, bulk storage terminal, pipeline and industrial gas industries." (company website)

mtrx(2-2)
MTRX 4-month chart
mtrx(2-2)_1yr
MTRX 1-year chart

Buy

I recently sold a lot of MTRX for a modest profit; I decided it's time to hop on the escalator again. After peaking at $13.21, MTRX retreated back below the 1-month average. Today it is bouncing off an inside-channel support line. The 50-day moving average crossed above the 200-day moving average this week, usually a bullish sign. Although my major indicator (PPO) is below the signal line, the gap has narrowed slightly. This is always a tricky move: jump too soon in anticipation, you can get burned; jump too late, you leave potential profits on the table. The fact that there is such a pronounced channel makes me more confident that there is a good chance the timing is about right.

  • Percentage price oscillator (PPO) — gapped below the signal line during pull-back, but narrowing
  • Volume — a tad weaker than I'd like

Based on technical analysis, MarketEdge calls MTRX a "strong buy" in a "weak upward trend," noting that it is "oversold" and "at a good entry point."

Sell

gain Bottom line
-18%

Uncle! I had great hopes for MTRX when the 50-day moving average crossed above the 200-day moving average, usually a bullish sign. When I bought it had just fallen back to the 1-month average, and I expected another up-cycle. Unfortunately, I failed to heed the PPO, which had crossed below the signal line. Shares fell immediately after my buy, but then the PPO started converging back toward the signal line, albeit below it. I was sure it would cross above, and I would escape punishment for my folly.

Alas, it was not to be. MTRX rose again just up to the 50-day moving average and tumbled again. By mid-July it was clear that the upward channel had been replaced by a downward channel. True enough, earnings are due out next week and a nice surprise could reverse the whole trend. Then again, a nasty surprise could send the stock into the abyss.

Yesterday MTRX made some decent gain, and I put in a trailing stop, determined not to ride down another cycle. Today the stop was activated, and my shares sold, albeit in odd lots almost at the end of the session.

All in all, a poor buy decision compounded by hope springing eternal.