Zoltek Companies (ZOLT)

Company

zolt(2-1)_1yr
ZOLT 1-year chart

"Zoltek Companies, Inc., through our wholly owned subsidiaries, engages in the development, manufacture, and marketing of carbon fibers for various applications. Our carbon fibers are used as the primary building material in commercial products. We sell our commercial grade carbon fibers under the PANEX trade name and our oxidized acrylic fiber under the PYRON trade name. Our operations are primarily in the United States and Europe and we sell our products worldwide." (company website)

zolt(2-1)
ZOLT 6-month chart

Buy

Zoltek made a double-bottom in March and has since clearly broken the down-trend line. The 50-day moving average has turned up and the PPO has been gaining strength for three weeks. One trepidation I have about ZOLT is that earnings are due out sometime next week. They are being very cagey: "Zoltek's second quarter 2009 ended on March 31. The SEC filing deadline for Form 10-Q is Monday, May 11-2009, so earnings could potentially be issued around that date. An exact date has not been established yet." Methinks stop-loss measures are in order.

  • Percentage price oscillator (PPO) — above the signal line and diverging
  • Volume — several higher-than-normal up-days in the past month.

Based on technical analysis, MarketEdge calls ZOLT a "Buy" in a "weak upward trend."

Sell

gain Bottom line
-1%

After getting stopped out of IVAC, I adjusted my stop-loss tactic somewhat: I set the stop-loss at 3% to trigger if the price fell 2% below the previous close (compared to 2% at 1% for IVAC). I was eventually stopped-out of the position for a small loss.

However, even those expanded criteria may have been too tight for ZOLT. I looked at all the trading days in 2009 when the low for the day was less than the closing price of the day before. Some relevant statistics are shown in the sidebar. The worst-case day saw the low more than 16% below the previous close. On average, the daily lows were more than 6% below the previous close.