LP Building Products (LPX)

Company

"LP Building Products is a leading manufacturer of high quality building materials. Builders and homeowners use our products primarily in new construction, repair and remodeling, and manufactured housing. LP products are sold through distributors, dealers, professional lumberyards, and retail home centers. Headquartered in Nashville, Tennessee, LP has been named one of the safest companies in America and operates production facilities in the U.S., Canada and South America." (company website)

lpx(4-1)
LPX 4-month chart
lpx(4-1)_1yr
LPX 1-year chart

Sell short

After peaking in August and September LPX has been trending down. Smaller than expected losses in November gave the stock a boost but did not change the direction of the trend. Last week a rally brought it back above the 50-day moving average, but it has quickly fallen back.

  • Percentage price oscillator (PPO) — has dropped below the signal line
  • Volume — although heavily traded, recent volumes have fallen below normal

Based on technical analysis, MarketEdge calls LPX an "avoid" but notes that it is "moving against opinion" and the chart "indicates a potential trend reversal."

Buy to cover

gain Bottom line
-4%

Yesterday LPX closed above the 50-day moving average with almost double average volume, and with no clear message coming from the PPO line, I decided to cover the short at a small loss. With the Bollinger bands narrowing a move one way or the other becomes more likely, and I am just being cautious.