Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
 |
Hottest
Stock on the Bulletin Board? |
 |
Last week when I described Calypte
Biomed (OTC BB: CYPT) as the hottest stock on the bulletin board, the
statement sparked dozens of emails from loyal readers.
Honorable mention goes to those who
pointed out that NeoMedia (OTC BB: NEOM) was really the hottest
stock on the bulletin board. In terms of dollars that are exchanging hands-
Calypte
wins - no contest. In terms of price appreciation over the last month,
NeoMedia
has won the horse race by three lengths. Calypte was $.18 on August
22nd and has since seen a high of $1.80- a 10 fold move.
NeoMedia was $.013 on September
8th, and traded to a high of $.44 on September 12th- that's a 33 fold move
in three trading days- AWESOME!! In an ironic twist Calypte Biomed
was trading at about $.02 in April of 2002 when it looked like the company
would close its doors. By the end of July the stock hit $.41- nearly the
mirror image of NeoMedia over a longer time frame.
I read a little about NeoMedia,
and I'm not sure what they do. The volume surge was sparked by the announcement
of a deal with Nokia Camera phones. However, the description of the company
includes an energy company component and a covert security company.
Both stocks are coming back to earth.
Calypte
steamed farther ahead than I thought it would. Sometimes people buy stocks
just because they are going up. Those are the same people that sell stocks
as soon as they start going down. I'm not recommending either of these
stocks right now.
Now, onto a stock that is not so
hot:
 |
Titan General
(OTC BB: TTGH) - Trades Below Stop Loss |
|
Towards the end of the day yesterday,
Titan
starting
selling off and traded below $1.20, the level I had set as a stop
loss for this situation. Sorry about the chart I've included. My normal
provider had corrupted data on TTGH.
I was wrong about this stock. It's
not the first time and it won't be the last. Everything I cover is risky.
We are going to have losers. If you can't handle risk, don't read this
newsletter. It's disappointing that the stock did not perform, but it gives
us an opportunity to look at the whole issue of stop losses.
Every time you buy a stock you should
have a plan. You should decide in advance if you are a long term investor
or a short term trader. If you bought TTGH for a short term trade,
you have to use the discipline of a stop loss. If you like the company
and bought the stock as a long term investment, this price drop is meaningless.
Since I presented this as a 60 day idea, I included a stop loss.
In the last bull market I made the
mistake of sticking with too many stocks as they died. I am learning from
mistakes of the past, and altering my approach to avoid past errors. I
will always give you the straight story as I see it.
As I pointed out in this weekend's
edition, TTGH has traded in a range between $1.30 and $1.45 since
the big volume surge near the end of August. I knew a break above $1.45
on volume would signal higher levels, but a break below $1.30 could signal
lower levels. Yesterday's break below $1.30 took us directly to $1.05.
So- if you are a trader- what do
you do now? I expect the stock will probably bounce from these levels.
Bargain hunters will probably jump in when the stock stabilizes. Stocks
rarely go straight down with no relief. The stock is entitled to bounce
into the $1.25 range off this oversold condition. Assuming it does,
you can probably get out with a $.10 to $.15 loss, no big deal and you'll
live to trade again. Wait a few days and see what happens.
If you are a long term investor,
keep an eye on the news releases and monitor their fundamental progress.
As long as the company keeps moving forward, the stock will trade up sooner
or later and you'll make money from these levels.
This might be the last edition I
publish on this company- time and circumstances will affect that decision.
In the interim, you are welcome to email editor@otcjournal.com
with any questions. I answer every legitimate inquiry.
The issue of stop losses is controversial.
Some people like them, others don't. It's an individual decision. The following
is a real life example of using stop losses which happened in my own accounts.
|
GLYCOGENESYS
(NASDAQ: GLGS) - A Case Study |
|
Glycogenesys is a case study
which argues both for an against using stop losses. This is a biotech company
that I heard rumors about back in June.
I bought 5,000 shares of this stock
for my account at $1.35 on June 13th. I bought another 2500 shares at $1.24
on June 18th. The stock traded poorly from the day I bought it, and
I sold the entire position the last week of July in the $.61 to $.66 range,
notching a loss in my own personal account of about $5,200.
I also purchased 2,500 shares of
GLGS
in my IRA on June 17th $1.12. I don't view this account as trading money,
and I let it ride.
GLGS closed at $.51 on August
11th. The stock rocketed to $1.09 on August 12th, and traded 6.3 million
shares. As you can see from the chart, the stock then pulled back for several
weeks, and followed up with its next move to a high of $1.75.
The moral of the story as it applies
to stop losses- GLGS closed at $1.37 today. Had I simply
held the stock for three months, I would be profitable on every trade.
Had I been a skilled enough trader
to sell the stock quickly, and then buy it back at the bottom of its trading
range, I could have made a substantial profit.
Therefore, stop losses work sometimes
and don't others. You must find a discipline that works for you, and stick
with it.
I have heard a number of rumors on
Glycogenesys.
They are all unconfirmed. I don't print rumors. I cover the facts and share
my own opinion about what the facts mean.
Shares of Glycogensys are
trading as if something major is going on. Average daily volume has increased
significantly since the August 11th rebound. The stock is clearly under
heavy accumulation.
Using simple a simple support/resistance
argument, GLGS looks like a buy in the $1.15 to $1.25 range. The
stock's behavior is telling you that major news is coming.
If you own the stock and major news
comes, here's how you trade it. If the stock trades up strongly ahead of
the news, sell within the first hour of trading after the news comes out.
Everyone will have known it in advance, and be looking to take their profits.
If the stock has not traded well
ahead of the news, it means no one knew about it, and the stock could trade
much higher.
Keep an eye on GLGS- something
is happening.
This is not a formal trading alert.
I would prefer to see the stock a little lower before crossing that bridge.
Charts Provided Courtesy
Of TradePortal.com |
