Even though those are the stocks about which I get most email, they aren't the ones I want to write about today -- because the stocks I like are the ones I talk about in my new internet TV show LiveStock:
(Contact me with any stock market questions you'd like answered on live broadcasts every Friday from 1-2PM which you can view HERE) have been influenced by some kind of temporary catalyst, whether it's an analyst or newsletter recommendation, message board hype, or stock promoter spam. After that's gone, all you have left are struggling small-cap companies looking to raise capital. It's ugly.
For example, the stocks I posted about the other day, Limelight Networks Inc (NASDAQ: LLNW) and Indymac Bancorp (NYSE: IMB), each surged 10% on the backs of these kinds of catalysts. The past few days, constantly struggling -- as judged by its stock chart, no doubt caused by a string of negative press releases -- Agria Corp (NYSE: GRO) surged because it was talked up on message boards as a result of being in the hot agriculture industry. Now, Heckmann Corp. (NYSE: HEK) is being talked and gobbled up because with its latest acquisition, it's now a Chinese water play.
Listen, over my wild decade-long career, I've traded stocks like Apple, Google and a host of smallcap companies, 99.9% of which have failed. After all this, there are two lessons of which I'm convinced: 1.) use technical analysis for largecap companies, analyzing their complex businesses is a waste of time and 2.) never believe smallcap hype -- respect it, based on price action and volume -- but never believe it, because it can disappear in a flash and then you just have some great stocks to short sell!
Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund
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Reader Comments (Page 1 of 1)
6-05-2008 @ 4:33PM
JHC said...
"After all, if it's meant to fulfill the $300 prophecy as foretold by the oracles (aka market cheerleaders), you'll still have plenty of room to profit, just without all the risk."
How does paying more for something reduce the risk?
6-05-2008 @ 4:36PM
tim said...
Great question, because once its broken out to new alltime highs, there's no ceiling to how high it can go...technical traders will all be forced to become bulls whereas now you have doubt and resistance as to whether it can breakout, hence if it starts to fade here, all the doubters will pile on and push it lower when after it breaks out, doubters can do whatever they want, you'll have technical traders buying every dip. Understand?
Tim
http://www.timothysykes.com
6-06-2008 @ 8:18AM
Beltway Greg said...
Tim,
Two week ago in another article you said to buy Apple? How about those solar stocks. Anyway, see you at $260.
Beltway Greg
6-06-2008 @ 8:27AM
tim said...
Greg, I'm a trader, my opinion changes daily based on news, expectations and charts. It's all about your risk-reward, what's risky to me, might not be risky to you
Tim