On April 30th, 2009 I posted a buy recommendation on Smithfield Foods ($SFD). At the time of my post, $SFD was at $9.40. I bought 350 shares at $9.50 because I believed the stock had been oversold on fears of a “Swine Flu” epidemic. As it turned out, none of the hogs SFD owned had been infected and none of the outbreaks could be traced to any of their herds worldwide. As panic increased, I again backed up my position in SFD buying another 18 shares at $8.76.

I sold those 368 shares today at $12.50 for a gain of around 30%.

I do think the stock is going higher but this is some profit taking right now and I wanted to lock in my gains. I’ll see if it pulls back again and revisit the stock in the next couple days. I expect it may trade sideways tomorrow or even a couple days as sellers book their gains.

When trading a stock like this, it’s important to recognize true rallies and book gains when you can. If $SFD doesn’t pull back, it’s ok, I’ll look for something else that has a bigger upside. This is just how I trade. I don’t look for trades every day and I want to be sure I can hit the targets I expect.

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