Thoughts: Market Cycles, the Industry Group, and GEVO
We are shifting to phase II of a bull run. Market should shift focus to cyclicals and smaller caps. Phase III is really a continuation of II, commonly known as "run the dogs". What it usually means, is no earnings companies or "stocks with potential" to develop earnings. While the shift from phase I to II is visible and logical, the latter stage is psychological and can start at any time. Most know this.
What intrigues me is the length and strength of the first leg that broke us to new highs. So how high is phase II going to go? Even though GEVO will take years to mature fully as a company, this whole young industry segment, that has been lagging badly, should start producing .... successes just at the right time to develop greed. (attract attention) Maybe some company gets bought out, discovers a breakthrough, signs a huge agreement, who knows what the catalyst will be. And the emotional feelings for this group remind me of tech days of the 80s before that bubble began. This industry group will probably go to go to bubble proportions before it is all said and done.
Right market conditions, right segment, and good horse for the race. " IF " we have the patience and enough down on the horse. This looks to pull back next week, but it looked to do that this week too and didn't. Volume dies, so does the short term trend. Accumulate .... and over weight the dips.
Enjoyed your well researched, thoughtful analysis of the situation. Yes, decisions regarding investment vs trading strategy are always in play. It would be sweet to be sitting pretty when and if the rocket takes off. I suppose it's a matter of how you want to utilize your capital in the shorter run...particularly if one has a small account. GEVO would be a nice one to keep in your back pocket, no doubt. Keep the posts coming, thanks!
I have time this weekend so I did a long term study which I almost never do anymore because there aren't that high a percentage of "long term" investors anymore. (including me) Long term is usually a year for the tax break on an up stock. Most losses are claimed within that year against trading gains. So the validity of long term charts aren't what they used to be UNLESS .... you have high institutional ownership.
As an example, take GTAT with 120% of outstanding being institutional ownership with 30% of that short. Yea, you read that right. (a missile in the making) Here, there is an extreme validity because the longs are long(er) term. Then look at a long term (3yr +) chart with OBV or On Balance Volume. This is the only indicator I use to see how accumulation or the lack of it, is going. The accumulation slope will support short term analysis and a decline will weaken the reliability. For GTAT, it looks pretty darn good going into that Oct window.
Now GEVO .... it is just beginning. It bottomed even though prices were higher than we are now and is about to go positive for the first time since the IPO. But it has .... turned. What that is going to mean besides better chart reliability is that volume will dry up on pull backs, eventually making them less severe in relation to the upswings. Another way of saying this is that if you trade the peaks and valleys perfectly, you are going to have trouble buying as much size as you sold without moving the price.
Once this happens, (and the spring is starting to coil) less trading and more investing will occur. GEVO will start to move. Still looks outstanding for that Oct small stock window. (or the next news release)