Gerber Scientific (GRB)

Company

"Gerber Scientific is the leader in providing innovative, end-to-end customer solutions to the world's sign making and specialty graphics, apparel and flexible materials, and ophthalmic lens processing industries. Our software, computerized manufacturing systems, supplies, and service are fully integrated for maximum customer support and flexibility. The scope and scale of our combined global resources enable our individual business units to leverage each other's strengths and share efficiencies for operational excellence. Focused on helping our customers win in their markets, Gerber Scientific continues to pursue new ways to drive innovation, lower costs, and deliver world-class service." (company website)

GRB 1-year stock chart

Sell short

Gerber Scientific peaked in September and has been trending down ever since. Although GRB got a boost from the earnings release in November, it was short-lived, and the trend has continued. In the last two days GRB has pushed above the 1-month moving average to test its resistance level ($12.25) on higher-than-normal volume. Today, however, it has failed to maintain the level and has begun to fall again. The price decline has been steep enough to bring the Bollinger bands well-below below the 50-day moving average, so it would take an extraordinary leap to threaten the downtrend.

  • Price momentum (PPO) — three-month slowdown (except last couple of days)
  • Trend (ADX) — weakening, despite the recent rally
  • Money flow (CMF) — barely flowing in after a strong outflow
  • Relative strength (RSI) — back up to neutral, but has been weak for past month
  • Volume — average daily volume is falling

Based on technical analysis, MarketEdge calls GRB a "short candidate" in a "weak downward trend."

Buy to cover

loss Bottom line
-5%

Selling short may have been the right move — that remains to be seen, as GRB is testing the trendline and the 50-day moving average. For that move, however, I got in too late, and sticking around for the results of the test might have been costly. Momentum (PPO), money flow (CMF), and relative strength (RSI) are all showing improvement, and that stacks the odds against holding out.