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On Monday (Feb-23-2009), I released a blog report that was fundamentally and technically bullish on the prospects for Smith & Wesson (NASDAQ:SWHC). While bullish fundamental conditions are still present and still require time to play out, the stock has become technically overextended and overbought in a very short period of time.

If one bought SWHC at the open on Tuesday at $3.09, they are probably up at least +18% as the stock is trading at $3.65 at the time of this writing and has traded as high as $3.73 during intraday. I am often fond of saying that trees don’t grow to the sky unless one believes in "Jack and the Beanstalk".

At this juncture, common sense and fear of losing profits tell me that a bird in the hand is worth two in the bush. It is time to book those profits and give the stock a chance to consolidate its gains. Even if it continues to run, 18% is better than a poke in the eye. Otherwise, very tight trailing stops should be considered to protect those gains.

Until then, stay Hillbent for the Market Direction….

Author’s Disclosure: None

Source: Time to Book Profits on Smith & Wesson