Adding More Fuel Systems on a 10% Drop

Includes: AMSC, FSYS
by: TraderMark

We are going to add a 2.4% exposure to our holding stake (0.1%) of Fuel Systems Solutions (NASDAQ:FSYS) on Thursday's 10% drop. The stock actually has fallen all the way to $44 but I just caught it here in the $45.50s on its initial bounce... $43s is its 20 day moving average. As always, there is a risk of buying a stock cascading down on no apparent news and big volume - but we'll take a chance since we've been playing it so close to the vest of late ....

My gut feel is this might just be some sort of algorithm reaction to the surge in natural gas prices Thursday (+8%); who knows the mysterious ways HAL9000. Obviously there is a huge gap in early November 2009 created by the earnings beat, so if the 20 day moving average is punctured we have to consider stopping out most of the position.

We restarted FSYS October 28th

Fuel Systems Solutions, Inc. engages in the design, manufacture, and supply of alternative fuel components and systems for use in the transportation, industrial, and power generation industries. Its components and systems control the pressure and flow of gaseous alternative fuels, such as propane and natural gas used in internal combustion engines.

[Nov 5, 2009: Fuel Systems Solutions Rockets 20% on Huge Earnings Beat]
Jul 2, 2008: Bookkeeping: Buying Fuel Systems Solutions for the 3rd Piece of my Alternative Energy Basket] {details on the company here)

p.s. speaking of "alt energy" stocks, American Superconductor (NASDAQ:AMSC) mentioned as a breakout Wednesday, continues to break to new highs on the year today.

Author's Disclosure: Long Fuel Systems Solutions in fund; no personal position