It's Time to Take the Money and Run: Mad Catz Interactive Poised to Pull Back (MCZ)

If the name Mad Catz Interactive, Inc. (NYSEMKT:MCZ) rings a bell, it might be because yours truly penned some bullish thoughts on the video-gaming hardware (joysticks, control pads, headsets, etc.) back on August 20th. Neither MCZ nor my write-up were received as anything partially special at the time - it was just another stock dissected by just another guy, and you may or may not have given it a second thought. The 37% rally in the meantime, however, may garner a little more attention.

That's right - MCZ is up 37% in just a little over a month. I'm not reprising my look at the stock to congratulate myself or boast, however. I'm looking at the stock again to let you know I now think it's time to get out of any Mad Catz Interactive positions that were entered because of my.... at least for a while.

Say WHAT? Isn't Mad Catz Interactive, Inc. one of the market's hottest stocks right now, up fifteen cents (21%) in less than three trading sessions? Why would anybody want to bail out now? In simplest terms, because the getting's gotten about as good as it's gonna get for a while.

As of today, MCZ is overbought. It's not just overbought, though. It's 72% above its 200-day moving average line (green), and up more than 100% since its June bottom around $0.40. It may have momentum, but there's not much momentum left to tap into here. In fact, I don't think there's any momentum left to dole out after today's pop.

Now, just so there's no confusion, this is NOT a permanently-bearish call on Mad Catz Interactive, Inc. In fact, I specifically think MCZ has already worked its way into a long-term uptrend, with all of the key moving averages now slopes upward, and with plenty of volume starting to flow in on the way up. It's just that the rally has become a little overextended, and a few too many people are itching to take profits here. One small stumble could start a small wave of such profit-taking, and realistically drive the stock all the way back to the mid-$0.50's before finding a floor and renewing the uptrend.

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You could just ride it out and hope shares make that recovery, and give up 35% of your position's current value in the process. Or, you could skip all that risk, lock in a 37% gain, and then buy the stock back at a much lower price in what will likely be just a couple of weeks. And, if it never actually rebounds after a pullback, you don't have to wade back in at all. Your call.

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