Profit Taking Possibilities in FUQI and PWRD

In the column on our sister blog this AM we suggested lightening up on sluggish performers in your portfolio ahead of today’s Fed announcement. We’re looking at a couple of stocks of ours for trimming that we had entered earlier this month just as the current phase of the rally began: FUQI and PWRD.

The reason for our caution is that they are making limited headway on unappealing volume and have already touched their 50 MA’s twice during their uptrends. While the first two touches of the line are often buyable a third can be more problematic.

And the third is just what we’ve gotten with FUQI this week after the stock sold off in ugly fashion last Friday. The market’s ballast has lifted this stock substantially since then but done so on much lighter and declining volume. FUQI has more than sextupled during the market rally and not formed an interim base. Given the history of how stocks move and FUQI’s recent downside escapades in a rising market, we feel it is an excellent example of a candidate for your “lighten your load” list.

PWRD has yet to decline toward its 50 MA for the third time. But the break out to new highs earlier this month was on above average but unexceptional volume. Since that time the stock has traded lightly with several failed attempts at new highs. Unless the stock can firmly advance we’d consider taking profits.