. . . .Small Caps. . . Cult Stocks and Beaten Down Internets. . . . . .
. . and to many bag holders, those can be one in the same. . . [too many folks marry their stocks]. . .
Look around. . . .Nearly all that you see today is short-covering!! You can tell by pulling back to a weekly view.
. . . .
I've been talking alot lately about Cult Stocks. . . those with large followings. . . and equally large short positions. . . these are stocks that have been shorted back from extreme highs. . .often caused by a mania of sorts. . .At times when it appears the markets could turn northward. . we see major short-covering by Cult Shorts which gets the attention of the Cult Longs. . .who buy more, starting a short-covering momentum squeeze out of nowhere.
Examples of this have been seen in TERN, RMBS, CMRC, SCON, RMTR, ELON, BVSN, NTRO, AETH, INSP, CRDS and most recently in MSTR and CLRS [TokyoJoe's Favorite B2B]. In the smaller caps, the list is long. . . and includes XYBR, WAVX, OTC:EDIG, HEAR just started getting a cult following on last week's news, GMGC, VPHM, HAUP, RRRR, ISLD, CNQR, CICI, CTXS, LNUX, RHAT, PLUG, LGTO, ADBL, etc.
Then there are the "Internet Cults". . . which have been beaten way back. . .yet when the markets could make a major advance tend to see jumps on short-covering. . . these include TGLO, CNET, KOOP, ASKJ, HLTH, NBCI, CBBC, CHINA, BNBN, ETYS, TSCM, PCLN, BIDS. . . or larger cap Internet Cults CMGI, ICGE, DCLK, VERT, EBAY, etc.
Finally, for the same reasons, the high-flying biotechs could see some major pops today on short-covering ahead of the FOMC announcement. . .due to the amount they were shorted back from their recent highs this spring. The usual names apply. . . CRA, PDLI, HGSI, MLNM, MYGN, INCY, GENE, GNSL, GLGC, etc., etc., etc. [this group will soon have more names than the Dot Coms.]
Look around the most active boards, percentage gainers and other leader boards and these are the symbols you will see popping up most often. With the criteria discussed, find some more. . . like "Where's Waldo?"
How to play these is up to you. [May be late this time around. . .but the lesson is important] You can pigeon some rat dogs and wait for the pop to dump. . . or scalp the momo and re-short the peaks. . .as these will tire quickly once the FED makes up their collective mind.
The important thing is this!! That you understand the dynamics that made these groups pop, so that on another day in another situation, YOU will be the one to recognize the similarities and confidently place your winning trades!
Because of my early understanding of this simple dynamic, I went around cyberspace in November of 1998 saying "BAMM at $2.75 was extraordinary" and 2 days later was selling it for $45. But that was when the mania went unabated. . . these days we must settle for less and work harder.
Best wishes,
Rande Is |
