I'm impressed by the desire many here now have for buying up beaten down techs. We've done very well with them over the past 2-3 weeks. . . with gains of 30% to 100%. . .
But I must add a word of caution. Even though there seem to be few losers in the bunch, we must consider that some of these microcaps and small caps are moving up on accumulation. . .either by fund managers or by investors. .[ICIX, PSIX, OMKT, KLIC, LGTO] . .while others are merely bouncing on short-covering, IMO. . or have flat-lined. . .[CMTN, NPNT, EEEE, ETYS, FNCM, WBVN,]. The former may be a safe place to park some cash. . .but care must be taken in the choosing. The latter could be extremely risky, as short-sellers re-enter after spikes. . .hoping for the company to go bankrupt this year. Some stocks will get action from both groups.
I would study the daily volume over the past few weeks as compared to the average volume. . . and the T&S looking for signs of accumulation. I'd also look at fundamentals, which will tell you which group the little stock would naturally appeal to most.
T&S can also reveal signs of short-covering moving the price, as opposed to accumulation. How does the stock respond to news? Does it move with the sector? Does it move each time the sector moves or not? Does it move on major market moves? Or between them? Is there momentum? Hype? Press? What is current buzz on the stock?
When buying a stock under $5, all rules of buying penny stocks apply. Ignore them at your own risk.
Rande Is |
