On Feb. 15 LJ International raised their fourth quarter guidance. They had previously forecast earnings for the fourth quarter would be between 0.04 to 0.11 cents a share. However, they upped their guidance to earnings of 0.16 per share.

The stock price got quite a boost after they raised guidance but has been selling off since.

If you shorted JADE based on my recommendation I think you should continue holding your short position. The raised guidance was a positive development but I still think LJ International is overvalued.

Q1 is a slow quarter for LJ International and I think investors are going to be disappointed with the guidance they give when they announce Q4 results. They have also filed a shelf registration and at some point they will probably announce a stock offering and dilute current shareholders.

I took JADE off my “free stock picks page” because I didn’t want people to think I was still recommending JADE as a short. However, I haven’t recommended to cover yet and if you still have a short position in LJ International I would recommend to continue holding it. When I do recommend to cover I will add the loss or gain to my “previous stock picks” page.

Disclosure: I am not shorting shares of JADE.