Why It's Time to Sell Cephalon

| About: Cephalon, Inc. (CEPH)

It is now time to recommend that Cephalon (NASDAQ:CEPH) be sold at the market. The stock has performed moderately since the Speculative Observation was issued on January 4, 2010. However, CEPH has performed well since our Speculative Observation of August 27th and October 8th of 2009. Since our original Observations, CEPH has provided many opportunities to buy the stock low with the better than even prospect of selling high.

Since our October 8th reiteration of CEPH, the stock has risen 31% to the current market price of $70.78. However, if we go by the last observation on January 4, 2010, CEPH has increased 13.41%. In the pursuit of "seeking fair profits" the returns that CEPH has provided within the last 61 days say that it is necessary to consider alternative opportunities. The key to investment success and a key principle of economics is to seek the best alternatives.

CEPH was re-recommended when it closed at $62.42 on January 4, 2010. As of March 2, 2010, CEPH was quoted at $70.78. Again, CEPH has gained 13.41% since the beginning of the year. The annualized return on this position would be close to 80%. Since it is unlikely that the stock can continue to climb unabated, we feel selling now is a reasonable policy.

Those not interested in following through with our sell recommendation can feel comfortable knowing that CEPH is a great long-term holding with a 13.41% downside cushion since our last investment observation. As the price of CEPH rises, it should be noted that the stock faces significant upside resistance at $70 and $80. We are going to continue watching this company to determine if the stock will meet our prior 3 month targets based on the Coppock Curve and other technical indicators.

As we have indicated in the purposes and function of this site, our goal is to:

  • maximize the annual yield of each trade.
  • reduce time between buying and selling of each stock.
  • exceed the annual yield of government guaranteed alternatives in each trade.

Disclosure: No Positions