Oct 16, 2009 @ 12:44 PM PDT
When the recession hit, Audiovox was already in the process of cutting its fat, whereas other companies were only just beginning.
Just to be clear, we don't mean the companies making the most noise through press releases, nor do we mean the stocks that are making the biggest gains. We're talking about the stocks that are seeing a major increase in trade activity as measured by the total dollar amount changing hands. We've narrowed the list further by focusing on the stocks creating the most organic excitement within the investor community.
In no particular order, we're going look at United States Natural Gas (UNG), Discovery Laboratories Inc. (DSCO), Magellan Energy Ltd. (MGLG.PK), Immunomedics Inc. (IMMU), and Ingen Technologies, Inc. (IGNT.PK).
(Oh, and be sure to check out our free newsletter offer at the bottom of the write-up.)
United States Natural Gas (UNG)It's not too often an ETF actually makes this list, but when it does, it pays to listen.
UNG is basically a mirror of the price of natural gas in the United Sates. It's still a viable trade though - it's still all about buying low and selling high.
Anyway, natural gas prices and oil prices - in general - should move in tandem. Over the last several weeks though, they haven't; oil has rallied, while natural gas prices have waffled... at best.
Monday's 7% pop for UNG may actually be part of a much bigger-picture reversal of a downtrend into an uptrend. The market sure seems to think that's the case anyway, judging from the way volume has picked up for the fund as it's started to test higher highs.
Discovery Laboratories Inc. (DSCO)Discovery managed to gain 30% during regular market hours, then topped it off by another 5% during after hours trading. Why? That's the weird part.... there's no clear reason why. Make no mistake though - when a stock shoots 30% higher, there's a reason; its just a matter of time.
The rumor is (though we hate to help spread one) is that the company's been sold, or has at least been approved for sale. The less-heard rumor was that one of the company's projects was on the way to getting an FDA approval. We can confirm neither, but it sure would make sense.
What interesting here is that DSCO was so beaten up, if the speculations are true, there may actually be some gains left to be enjoyed. If the rumors are completely invalid, you could still make the argument that DSCO is pushing up off the lower edge of a trading range.
Magellan Energy Ltd. (MGLG.PK)Just to clarify, Magellan was one of the day's most traded stocks - it was just net selling... the stock close nearly 40% lower. However, that was largely the result of the penny stock's (a pink sheet equity) 360% gain over the three prior days.
What promoted the rally in the first place? Mostly it was speculation - though supported by some pretty clear news release before the run up - that the company's natural gas operation was starting to produce some significant amounts. (We don't think it's a coincidence that UNG started to perk up around the same time.)
So what allowed the pullback? We'd say it was the 360% gain over the course of three days; we'd take profits too.
As with almost all penny stocks, and pink sheets in particular, a sudden success led to questions of whether or not Magellan was legitimate or not - it seems a little too good to be true.
Our take? Guilty until proven innocent, though the volatility is the stuff penny stock traders dream of.
Immunomedics Inc. (IMMU)This is kind of an odd one. The activity was mostly on the selling side of the bid/ask, but the sellers didn't seem to have too much trouble finding buyers - the stock only closed 4% lower.
Even more odd was the dip on what seemed to be relatively encouraging news. The company unveiled a new methodology for attaching F-18 peptides to their novel cancer-imaging markers. Some good news regarding the feasibility of their Phase II non-Hodgkin's lymphoma treatment was also announced.
So why the selling? Perhaps it was a case of "Buy the rumor, sell the news". That can happen if shares run up 170% over the span of three months, as IMMU shares did between March and early June. Where do shares have left to go now?
The investor side of us just says "that's biotech". Our trader side tells us to worry about the pullback, seeing all those profits that could be taken now.
Ingen Technologies, Inc. (IGNT.PK)Another pick sheet, this isn't the first time we've encountered Ingen.
As we said then, it's hard - if not impossible - to take anything you hear about any pink sheet stock with any degree of seriousness. That does not mean, however, that you can't take advantage of all the hype and trading volatility that seem to accompany these penny stocks.
For what it's worth, Ingen went on a publicity rampage a few weeks ago, but the campaign didn't seem to get any traction until June 9th when the medical device maker reported a 'strong' (albeit ambiguous) response to a magazine ad they had placed.
It was a strange piece of news to tout, but whatever. What was even stranger was the acknowledgment that PayPal sales had increased. There's nothing wring with PayPal - it's just hard to take a company seriously when PayPal is a key component to the revenue-gathering vehicle.
Since then, we've seen one news release right after the other continue to spur interest in the stock. The centerpiece (so far) was Monday's announcement that profitability was expected in Q4.
Do we believe it? Who knows - that's not the part that got or kept our attention in the first place.
No, it was the chart. Pink sheet or not, the breakout move from the 9th - and the recovery we've seen from the initial pullback - are a hint of growing interest. Yes, it's mostly fueled by news, but whatever...we're not getting married to it.
That's it for today, but if you'd like more small cap and penny stock trading ideas - complete with entries and exits - then sign up for the free e-newsletter today. You never know... we might make one of these stocks an official Small Cap Network trade soon.
