A Portfolio Update: Too Much, too Soon

By David Sterman,

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To make money in a churningmarket , you need to have firm discipline when it comes time to buy and sell. If you're watching a stock make a solid upward move, then it often pays to wait out the mini-rally, finding a more compelling entry point for that holding.

Case in point: Zoltek (Nasdaq: ZOLT ) , which I recommended on Thursday afternoon at around $7.70 a share.

Shares have spiked roughly 10% since then (congratulations if you bought when I wrote about the stock), and I prefer to wait and see if this stock comes back to the levels seen last week. It may never come back to those levels, and as a result, it's possible that I may not buy this stock at any point. (Recall that I wait two trading days after an investment idea is presented before looking to acquireshares for my $100,000 portfolio.)

It's unclear why shares are moving so briskly. Perhaps it's because investors sense that the company will release solid fourth-quarter results in about a month from now. Perhaps it's because this stock is heavily-shorted (with the short position equivalent to 11 days' tradingvolume ), and short-sellers are covering some of that position in the face of the stock'srelative strength .

Action to Take --> Regardless, I continue to think of Zoltek as a solid investment, but a questionable trade. Sharp upward moves have a way of reversing as momentum investors exit a stock just as fast as they entered it. In the interim, I will be delivering additional investment ideas in coming days. Make sure you don't miss a thing by signing up to have these articles sent straight to your inbox as soon as they're published. Click here to sign up .

Here's the Latest Snapshot of my $100,000 Real-Money Portfolio...

-- David Sterman

David Sterman does not hold positions in any securities mentioned in this article. StreetAuthority, LLC does not hold positions in any securities mentioned in this article.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing Basics
Referenced Stocks: ZOLT

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