Sunday, August 24, 2008 Small Cap Momentum Update Small Cap Momentum is harder to come by in this market but there has been some. The right news will still work but I have to be very selective. Naturally short selling strategies have been working better than momentum longs in this market. Plays like PDO do not happen every month but they do happen several times per year.
China stocks have been dead on arrival (with few exceptions). The Chinese market has been down and there has been talk of slower growth. I have been shying away from most of them until I see some solid momentum.
Bought VIFL at $2.10 and it hit $3.10 or 48% one day move. It has now settled 2.40-2.50 and was a good trade on the FDA decision.
Catalyst to watch for going forward on VIFL that would put it in play would be a contract on the lettuce and the spinach. The company is small but is profitable. It was a nice momentum mover (48% - one day).
OGXI made a nice move on Friday after it received FDA fast track approval on one of the Company's drugs. The reason this is one to have on watch list is that it only has approximately 2m shares outstanding (may go up after this milestone) and a float of 1.8m shares per Bloomberg. Float Information
IDSA made a move from $14 to $18 and UFPT from $9 to $11 since posting on their earnings.
TAYD reported earnings with a nice comment on international orders. This Company needs to keep the street updated on progress more than once per quarter. It is a solid business and will keep watch for demand picking up. I originally bought this in the $5's it hit high $7's then went back to low $5's. I still believed in it after the initial pop and time will tell the story here.
NTIC has bounced off the bottom in the low $9's and went back to the $11 area. Again, like TAYD this Company needs to keep the street informed on their green initiatives. I would like to see an update on the Waste Plastic to Oil Technology. I originally bought this in the $10 area and it doubled to $20 before settling all the way back to my original buy. I believed in it after the initial pop but like TAYD, I want to see some news.
The market environment was very different when I first bought TAYD and NTIC than it is now. These plays can still be big movers with the right news.
I have been doing well trading the ETF - SKF which is double short the Dow Financial Index. This is a very volatile stock that can have daily $5-$10 swings and moves very fast. It goes higher when financial sector news is bad. It is difficult to post trades because it moves so fast. I did buy some core shares at the $113 level on the last big dip. Will try to post more frequent thoughts on this ETF.