Fading Momentum

The high beta stocks of the Nasdaq 100 and the Russell 2000 have been very weak out of the gate despite heavy call buying. Could this be a  signal of fading momentum? The indicators are favoring the bears in the early going.

8 comments:

Anonymous said...

If anybody here in the readership can recommend any small caps that are about to break out, please list them here.

I would much appreciate that.

I have one HMPR but I'm not in it. Have been in this in the past, and it just doesn't move enough. Although I think I can make money on it now, I think there are bigger fishes to fry out there.

I think the market is rotating into no name left out shell companies right now.

Please let me know. I'm still long PROV (which is breaking now), PCBC, and EDZ.

-OL DAWG

David said...

EGMI is small cap. Not sure if about to break out is how I would describe it. Has no debt, EPS expected to grow from 14cents/share in 2009 to 24cents/share in 2010. They make an electronic card that can be used as a "scratch off" in state lotteries. They are also using it in promotional markets where bulk of eranings come from. I bought it origianlly about 2 years ago when it was trading at $0.20/share. Is now at $1.40/share. They are in process of signing a contract to supply THE only scratch off vendor in China. They had an absolute whale on the board who unfortunately passed away about two months ago which is when stock fell from $2.20 down to its current level.

Tsachy Mishal said...

I researched CRME last month. I really liked the prospects of the company but the stock took off before I could pull the trigger. Seems like its broken out to me but Im not a technical analyst.

Anonymous said...

Thanks David and Tsachy. that's a monster of a trade on EGMI.

CRME has broke looks like the 4.75 resistance. But it's coming from 4.

PJ said...

My big concern is this: Fed to add $1.4 trillion to QE?.

If this is true then I have to close all my shorts.

I hate playing in a rigged casino. When Washington can redistribute $1 trn at will, only Washington insiders know what's going to happen.

Tsachy Mishal said...

The numbers in that Forbes article are wrong. The entire MBS buying program was 1.25 trillion and it will be done in March. I think there is about $100 billion left.

The internet is a great thing because it gives access to viewpoints that are not usually heard in the mainstream media. However, there is a lot less fact checking as well.

PJ said...

Tsachy -- There's $173 bn left. He's saying that the Fed will borrow ANOTHER $1.4 trn from the banks for a new asset purchase program that will begin April 1.

The first $1.25 trn lifted the Fed balance sheet from $800 bn to $2.2 trn. He says the next $1.4 trn would take it to $3.45 trn. Must be partly funded by selling Treasuries.

Personally, I don't believe it, and I haven't sold my shorts yet.

David said...

I think EGMI could be a $6 stock in next couple of years. They need to execute their china contract and get a big promo product (MLB or NFL or NBA or big singer or American Idol). They have been hintin that they have been in discussion with all these folks for past 1 year. EVen if you put a 20x multiple on their $.24/share of EPS in 2010 you could et to $5 without a big win in any of the areas I talked about. Company has no debt.