To OTC Journal Members: 
 

Spencer Pharma (OTC PK: SPPH): Technically Tasty

Is it possible for an idea to be 100% technical? When a stock is delivering a volume explosion and heading up the charts, there's no doubt. That's exactly what today's idea is. A technical recommendation that looks like it's good for a money making trade. The stock is going up, and looks to me like it might have several more days of new highs to notch. There's a chance for the nimble trader in us all to book a nice profit on this one.

Spencer Pharmaceutical (OTC PK: SPPH) rocketed up the charts on huge volume this past Thursday, and technically the stock closed Friday like it wants to go higher. Here's the story.

I've read several accounts describing their technology. Spencer Pharma, according to accounts I've read, has technology that allows them to develop oral solutions for injectible medications. Another words, you can take a pill instead of a shot. I've read the company is developing an oral version of Meformin for the treatment of diabetes. The company has a couple of patents, and other drugs are purported to be in their cross hairs- Alzheimer's, Central Nervous System, and several others are mentioned.

The market has been bidding this stock up since last Thursday on millions of share of volume on one piece of huge news- last Thursday Spencer Pharma, as it was trading at about $.25, announced it had received an all cash tender offer to buy the company out for $.97 per share by an unnamed private equity fund.

The most current news release out of the company states the private equity fund will be named by November 19th (this Friday), leaving the market a whole week to speculate on the credibility of the offer.

This stock, which was trading about 100,000 shares a day, traded nearly 6 million shares on Thursday, and 2.76 million shares on Friday. That's a volume explosion, and implies the market is willing to accept the possibility the story might become reality.

Since this is mainly a technical idea, I've provided all sorts of technical stuff for you to look at on the chart. First, there's price and volume- both up dramatically Thursday and Friday. Then, there's the MACD indicator, which just turned up above the neutral line.

I put in the 50 and 200 day Moving Averages. Both well below Friday's close, which suggests an uptrend.

Finally, I included stochastics. This is a measure of momentum, and that line has just popped above the neutral line. 

Those technical indicators are all well and good, but to me there is one telling feature that tips this idea into the realm of a great risk/reward trade- the way the stock closed on Friday suggests higher levels today.

Note the stock surged big time on Thursday. It traded nearly up to the $.58 mark. Friday, the stock tried to correct, came back down to $.42, but closed on the absolute high trade of the day, and at the highest level since the news came out. 

Closing at the high of the day on Friday sets this one up to continue higher in my view during the course of this week so long as there remains a mystery about the private equity fund. 

This stock could chug right on up to $.90 without much trouble. One never knows.

For you momentum penny stock traders, I suggest you pounce at the open, unless it gaps open big. I'd suggest risking 10% to make 50%. Get in. It's your call, but if it goes against you 10% loss would be tolerable. 

If the stock makes another new high at the close, you'll be glad you did. Like I said- too risky for many. But, if you're a nimble trader, this one is tailor made for you.

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