Yesterday the U.S. stock market indexes closed mixed after spending most of the session in the red. The Nasdaq Composite showed the most strength, closing +8.26 points to settle at 2710.76. Both the DJIA and the S&P 500 closed nearly unchanged.
The indexes masked a big move in selected sectors. The solar stocks, many of which have been mentioned on this blog, made a stunning move. HSOL ($1.71) and JASO ($1.94) detailed in the January 5 pre-market report advanced 36.8% and 34.7% respectively. TSL ($9.43) rose 29.1% and TAN ($2.99) rose 12%; both of which were also mentioned in prior day setups.
RENN, mentioned in the January 2nd blog entry, opened strong and continued higher throughout the session, closing at $3.85, +10.3% on rising volume of 8.8 million shares. A position was established in RENN at $3.67. JASO was sold today at $1.63 from last Thursday's $1.37 buy, only to see it rise another 21% intraday after the sale.
A word of caution is in order regarding these low priced stocks. Most people should avoid trading this highly volatile sector of the market, as even a small move in price can mean a quick loss of 10% or more in a matter of minutes. It is much harder to cut your losses properly on low priced stocks, and your timing must be impeccable to consistently make money trading them.
As I've mentioned on Twitter, it is not my preference to trade these stocks priced under $5, but it's the segment of the market that is moving right now. Much of the moves can be traced to relentless tax-loss selling late in December coupled with short selling. A bounce back move was probable and I've played the move, but I don't expect these stocks to be the leaders of the next bull market.
Should the U.S. equity market continue to shrug off bad news from the Euro zone sovereign debt crisis as its done in the first 7 trading days of 2012, then the rally will broaden and more stocks will setup and offer opportunities.
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