Exactly one month ago today I penned some bullish thoughts on Elite Pharmaceuticals Inc. (OTCBB:ELTP). If you're familiar with the company - or a regular reader of this site - then you may know why that sounds a little "off." See, at the time, ELTP shares were falling rather quickly, giving up all the gains they had made just a few days before. Almost needless to say, my premise was not a well received one. Let's just say I received some "colorful disagreements" by being optimistic about the biopharma company.
Well, what else can I say now, other than it's fun to be right, and satisfying to be vindicated. ELTP shares have rallied 98% since my last look at the stock back on August 19th.
I'm not reprising that write-up to brag, however. I can and do misfire as much as anybody else. The reason I'm bringing Elite Pharmaceuticals up again today is to suggest now's the time to lock in your gain and walk away, if you stepped into a position on my advice last month. [Never let it be said I don't follow up on my picks.]
That's going to be about as tough to swallow for some traders as my original bullish call on ELTP was back in mid-August. Shares seem to be soaring now, and bailing out here feels like you're getting off the bullish train in the middle of the journey. I get that. I'm just saying, after too many years in this business and too many gray hairs by being in this industry, I've seen stocks get up-ended - with little to no warning - right in the middle of what seemed like an unstoppable rally. Indeed, a lot of folks were chastising me for going long on a stock that "had no shot at any upside" a month ago, yet that very stock has nearly doubled in the meantime. Nothing lasts forever, and the time to expect it is when you least expect it.
Now, I'm not saying Elite Pharmaceuticals will n ever rise again. In fact, I specifically said the stock was entering a long-term rally phase when I explored it back in August. I'm just saying the potential pullback from here is a little more than the average investor may want to ride out. Once we bleed off some of this overbought pressure, then we can start wading back in again. That could be somewhere around the $0.10 area, where ELTP had to regroup late last week and early this week, and where the 20-day and/or the 50-day moving average lines will be in a couple of days when they could be tested.
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