Small Waves Can Offer Consistent Rides
In general we like to focus on the
higher-quality issues, those that afford consistent action and volatility. These
characteristics are the life-support system for daytraders. But, there
are those days when I can give you ‘a million reasons or more’ as to why it
might be time to trade a microcap issue.
When news comes out on a stock that most would
normally view as a speculative long-term gamble, this can quite often become a
wonderful intraday trading opportunity. When volume surges with price,
establishing intraday momentum, all that we need to look for is a good reason to
enter the stock. The best way that I know how to do this is by looking for
patterns within the established support and resistance levels of the intraday
range.
In today’s trade, Wave Systems
(
WAVX |
Quote |
Chart |
News |
PowerRating)
was the small-cap play du jour after announcing some kind of handshake with
somebody important in the land of large caps. I pulled up the stock as it was
consolidating in a 3-bar pattern at session highs. Assessing the attached
technical action with the story that came out during the first hour of trade, I
knew this had the makings of a very nice ride, even for such a small ‘wave.’ I
alerted TMs
Chat about the stock and my interpretation of why it looked to be one to
jump on top of.
‘Siriusly’, I don’t know if the story was worth
buying, but I do know when a long-term speculative gamble offers a
high-probability intraday trading edge. Only time will tell if the investors
ever make good on this lil’ company. In the meanwhile, we can always ride the
solid ‘Wave’ intraday, and get out before the conditions change once again.