I'm constantly on the hunt for solid swing trades like LOCM, MITL, AEN, AMWI,
UPI, TAT and JOEZ. Normally I try to position before the move like I did with
HDY recently at $3.06 before it ran about 30% the following day, however,
sometimes swimming with the current is an easy way to grab quick profits too.
Swing trading, for those of you who are unaware, is a speculative activity where
stocks are repeatedly bought or sold at or near the end of up or down price
swings caused by price volatility. A swing trading position is typically held
longer than a day, but shorter than trend following trades or buy and hold
investment strategies that can be held for months or years. My filter for the
stocks on this list is between $.25 and $5 with 300 trades or more the day
before. The following stocks could deliver some decent profits moving forward if
they continue so here's what I'll be watching for. Local.com Corp. (
NASDAQ:LOCM ) operates as an Internet search advertising company that enables
businesses and consumers to find each other and connect locally. I believe
Local.com is a prime buyout candidate by either Groupon, Google or Living Social
due to their huge traffic and extremely large footprint in the daily deals
space. Groupon (NASDAQ:GRPN) has a huge market cap comparatively ($12.09
billion) so it would be very easy for them to buy LOCM ($52.55 million). A quick
search of Local.com on Alexa, Compete or Quantcast illustrates the massive
traffic Im referring to, which is exactly what companies like Groupon want and
need to be successful in this competitive niche. LOCM has $10.12 million in
cash, $8 million in debt, 22.08 million shares outstanding and a book value of
$2.38. The reported short interest on LOCM is very high at 10.75 days to cover
which is why I have bought and like the stock above $2. I never base trades on
buyout speculation but instead try to position technically and fundamentally for
solid swings if I get lucky then so be it. Since starting this service about a
year ago Ive only been able to time one buyout perfectly which was TomoTherapy
and wow was that a wonderful morning back on March 7, 2011. Additionally, LOCM
is trading well under a big placement from earlier this year meaning big money
was willing to support this LOCM at much higher levels. Technically I think LOCM
is on its way to $2.70 $3 or better in the short term after having held support
at the $2 range once again. Ive made some big bucks swing trading LOCM in the
past trying to time a buyout, watch this video for proof of how I did it .
Redchip recently covered the stock (paid for by LOCM) and I think they did a
nice job detailing why I think LOCM will eventually be bought out. I love the
Beta on LOCM at 2.27 which is why I come back to this swing trade so often.
Mitel Networks Corp. ( NASDAQ:MITL ) provides integrated communications
solutions to the small-to-medium sized enterprise market in the United States,
Europe, the Middle East, Africa, Canada, Caribbean, Latin America, and the Asia
Pacific. Shares jumped big and I mean big Friday after Q2 results showed revenue
growth and positive signs of restructuring. MITL has $71.30 million in cash,
$310.40 million in debt, 53.60 million shares outstanding and a book value of
$.82 per share. Their market cap is $189.21 million. The reported short interest
on MITL is high at 9.47 days to cover and no doubt part of the reason the stock
gaped up so high Friday morning. This is the same type of action Im looking for
on Local.com and a few of my other swing trades that have high short interest.
All you need is good news out of the company and short cover drives up the price
very quickly when its that high around 10 days to cover. I used this same
technique on Hyperdynamics (NYSE:HDY) last week buying at $3.06 before it ran
about 30% the following day . Technically Id look for MITL to hold $3.30, not
rocket science, and shake out profit takers while consolidating with new buyers
like myself. Once it reloads it appears the high $4s are a good swing trade
target. Adeona Pharmaceuticals, Inc ( AMEX:AEN ) operates as a pharmaceutical
company that develops medicines for central nervous systems. AEN has $7.47
million in cash, no debt, 28.13 shares outstanding and a book value of $.30 per
share. The reported short interest on AEN is also high at 7.49 days to cover as
of the last settlement date on 11/15/2011. Wednesday AEN reported top-line
results from its pilot Phase I/II open label, three month safety study of oral
high dose zinc therapy in ALS, also known as Lou Gehrig s disease. This chart is
clearly in breakout mode and news like this can stick and keep it in play for
quite some time. Right now I like it above $1.10 and think itll trade just below
$2.25 in the short term or the 52-week high. The Relative Strength is a bit
toppy here off this move so Ill look to accumulate a position on the dips. My
only concern here is the market cap is outside my $100 million to $300 million
range but again, the chart is hard for me to ignore so Ill definitely make an
exception as I do from time to time. Like LOCM, the Beta of 2.27 makes this
trade more attractive to me than others. Amwest Imaging Inc. ( OTCBB:AMWI ) is a
pump and dump and not deserving of a company description. Im almost embarrassed
to include it amongst some of these quality small caps but honestly, Im just a
swing trader and if I can game a pump and dump for profits you better believe
Ill do it. Profits are profits, doesnt matter what stock it comes from after the
trade clears your account. So anyway, they claim to be a development stage
company, focusing on helping companies become efficient through digital
conversion and indexing of documentation blah, blah, blah. AMWIs market cap, for
now, is $124.39 million but dont expect that to hold up forever. Bottom line is
their the focus of a pump and dump right now so I have nothing else to add on
this company other than if youre going to trade the momentum you better know
what youre doing. Trades like this are not for beginners because the price
action can get very ugly very quickly without warning when pumps dump. If you
dont believe me then read my blog post here on another recent pump and dump
Raystream (RAYS) . Anyway, it made the filter but Im not sure Ill trade it given
all the other options on this list. Uroplasty Inc. ( NASDAQ:UPI ) is a medical
device company, engaging in the development, manufacture, and marketing of
products for the treatment of voiding dysfunctions. I really like the chart on
this one so if the Relative Strength can hold the centerline this time Ill look
to swing it because I think it could pop in the short term. UPI has $14.16
million in cash, no debt, 20.81 million shares outstanding and a book value of
$.98 per share. The last reported short interest on 11/15/11 was 23.75 days to
cover which is massive and no doubt part of the reason shares bounce from time
to time. While I dont know or care to know a ton about the company, the short
interest alone could make for a profitable swing if the company sneaks those
shorts like MITL did last week. Id say a reasonable swing trade range would be
between $4.30 and $6 in the short term if and when it can break through the $5
range which will offer up some sellers. UPIs Beta is 1.43 and the market cap is
$94.04 million. Transatlantic Petroleum Ltd. ( AMEX:TAT ) is an integrated
international oil and gas company, engaging in the acquisition, exploration,
development, and production of oil and natural gas. The market cap on TAT is a
little big for me at $501.05 million but I really like the bull flag on the
chart so its in play. CEO N. Malone Mitchell III bought 110,000 shares,
increasing his purchase just in November to 610,093 shares, so that he ended the
week with 1.9 million shares. That type of size is what I look for when there is
insider buying taking place. A few thousand shares Id consider fluff but over
600,000 in November is not fluff out of a company this size. Technically this is
a clear cut retracement play so Ill look to position of the 20 Moving Average or
even the $1.10 range should it pull back. If it advances from here, which i
think it might then $1.70 to $1.80 is my short term swing target. TAT has $22.13
million in cash, $159.13 million in debt, 365.73 million shares outstanding and
a book value of $.68 per share. The reported short interest on the stock is
relatively small at 1.7 days to cover so dont expect a short squeeze to assist a
swing trade move. The Beta is 1.48, I like them above 2. Joes Jeans Inc. (
NASDAQ:JOEZ ) engages in the design, development, and marketing of apparel
products worldwide. JOEZ has a market cap of $37.25 million, total cash of
$11.64 million, debt of $4.56 million, 64.22 million shares outstanding and a
book value of $1.01 per share. The reported short interest on JOEZ is 1 day to
cover so theyll be no help from shorts should it continue up from here. The Beta
on JOEZ isnt desirable either at 1.34 meaning its not going to give me the
returns I look for as quickly as stocks above 2 like AEN and LOCM. Technically
JOEZ looks attractive if it can hold this recent move above $.55 then theres
really no resistance until the $.70 which could mean an easy $.10 per share
profit. Other than AMWI, this is my least desirable trade but it did hit my
filter and Ive traded it before so I felt obligated to report on the 7% move
Friday. The Relative Strength has not broke the 70 line all year so itll be
interesting to see if this move sticks, then I might try a swing with a 10-20%
goal across several days. I am long LOCM
No comments:
Post a Comment