FRPT is down roughly 77% for the past year. A post mortem provides us with some good lessons in classical technical and sentiment analysis.

As usual, the price bars are colored according to the status of our relative momentum indicator. Red = underperform. Yellow = neutral. Green = outperform. The dots are the InVivo.Stops.

We have marked the chart to illustrate the key points to be learned:

• The “head and shoulders top”: LS (Left Shoulder), H (Head), RS (Right Shoulder), N (Neckline)
• The phases of the sentiment cycle: 1./2. = Disbelief/Overt Warning, 3. = Panic

We turn out attention to the financial media and what was said about the company. Note that it was not until December 2007 that the “why” for the decline in stock price was widely circulated and how investors who waited were left holding the bag.

• Wall Street firms still have a rating of 3.57 which Reuters equates to a “Underperform” recommendation. (Can you believe that Wall Street firms were right about something?)
• Force Protection Off Course
  Force Protection suffered on Wednesday from what appears to be a change in the way the U.S. government selects its armored vehicles. The company’s stock lost a quarter of its value after it failed to win much business in the last slew of major federal defense contracts of 2007.
• Force Protection Bloodied
  The U.S. government may be shifting gears on what it is looking for in armored vehicles, and Force Protection paid the price for that perceived change on Wednesday, losing a quarter of its value as it failed to win much business in what looks to be the last major federal defense contract of 2007.
• Force Protection CEO’s Fighting Words
  “Maybe the chief executive of Force Protection should speak publicly more often!
  Faced with mounting criticism, Force Protection went on the offensive Friday. In a rare statement, the armored vehicle maker’s Chief Executive Officer, Gordon McGilton, defended the firm on its website.”

In conclusion, today’s case study illustrate how technical patterns unfold again a sentiment cycle backdrop. While it is fun to pick stocks, the emphasis must be on diversification and managing risk.