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