A Yes, a No, & a Maybe - Looks at VSPC, DPTR, and CDII

Stocks are rebounding from a bout of strong selling late last week, though it will take more than a day's worth of bullishness to affirm that it's safe to get back in the water. In the meantime, a handful of small caps have really served up some trade-worthy charts.... though not necessarily bullish. Here's a better look at Delta Petroleum Corp. (NASDAQ:DPTR), China Direct Industries, Inc. (NASDAQ:CDII), and Viaspace Inc. (OTC:VSPC)

You can slice this small cap's chart anyway you want to....you'll still come up with the same result though. China Direct Industries, Inc. (NASDAQ:CDII) just went from bad to worse today, and I suspect CDII shares will be giving up a lot more ground before making any significant move higher again.

This is actually a two-tiered breakdown for CDII. The first stage was the move under the 20-day moving average line (blue) two weeks ago. The slight retest of - and failure to cross back above - the 20-day average verifies that it's a ceiling again (as it has been more often than not the further you go back on the chart). The second stage of the China Direct Industries breakdown came right after the failure to move above the 20-day average... the tumble under a short-term rising support level (thick, black).

The clincher was put in place today, when China Direct Industries, Inc. moved under a horizontal support line (orange) that was shaping up to be the last bastion of hope for the bulls. Though the selling volume has remained light throughout the breakdown process, the technical damage has likely broken CDII beyond repair anytime soon.



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I can't even begin to describe to you how irritated I was on Thursday when Delta Petroleum Corp. (NASDAQ:DPTR) soared well past my line in the sand around $1.49, opening at $1.82 and hanging around there all day. Why was I so upset? Because DPTR was one of those small cap names I know had tons of potential that just needed to be unleashed by a move above a key ceiling line. Jumping well above that ceiling, however, did nobody any good.... there was no chance to get in at a decent price just above $1.50-ish.

Well, good news - the bulls didn't get away with the hyper-aggressive move. DPTR shares have been 100% reeled in for a restart. And, I think it's a very healthy retreat... the kind that primes the pump for a rebound or resumption of the trend that 'should have been'. In other words, the move Delta Petroleum Corp. is making now is the healthy, SUSTAINABLE one. In fact, the 20-day moving average line (blue) has stepped up as support again.

If you wanted to play it ultra-safe here, you could wait for Delta Petroleum shares to fully clear my slightly-modified ceiling at $1.55 (the upper orange line). I don't think it's totally necessary though.

Target-wise, although you can't see it on the chart below, DPTR will be facing a huge ceiling at $4.68. That's a stretch goal though.... you may want to mull an exit at any major reversal signal between here and there.

And finally, I think you need to put Viaspace Inc. (OTC:VSPC) on your list of small cap stocks to watch. I don't think it's trade-worthy just yet, but there's something about this chart of VSPC that hints a breakout could be brewing.

For starters, VSPC has knocked down one of its falling resistance lines (orange) after it made its first higher low since October of last year. This is a significant hint of a trend shift. The other big bullish clue for Viaspace shares is the string of growing bullish volume we've seen emerge over the last month or so. Of course, these two bullish clues fuel one another.

More aggressive traders may find is sufficiently bullish when/if Viaspace Inc. works its way above the ceiling at $0.015, which only recently was defined as resistance. If you're looking for a little more certainly from VSPC and don't mind getting in a little late, you could wait for this small cap to move above the next falling resistance line currently at $0.017 (but falling quickly).  

If you'd like to receive further updates and any changes in our opinions of DPTR, VSPC, and CDII, be sure to sign-up for the SCN Newsletter today! It's FREE.