Not All Is As It Seems - Looks at ADY, FDS, and BKTK

The headlines say that investors are waiting to hear what the Fed has to say today. The results, however, make it clear the bulls aren't waiting for anything - the major large cap indices are all up by more than a little bit. But what about the small (and micro) caps? As usual, they're a more case-by-case basis. Here are some quick reviews of FactSet Research Systems Inc. (NYSE:FDS), American Dairy, Inc. (NYSE:ADY), and Black Tusk Minerals Inc. (OTC:BKTK)... small caps of great interest, but perhaps with misleading signals.

After opening well in the red today, and still lingering in the hold by about 2%, the raw numbers suggest American Dairy, Inc. (NYSE:ADY) is best avoided. A closer look at the chart, however, may actually reveal that ADY is a hige buying opportunity following its nine-month tumble.

What if - and I'm just hypothesizing - what if the only thing ADY was needing to do was go back and close the huge bullish gap from last May? Incredibly, it hadn't done so until today. Oh, we've seen a couple of good efforts from American Dairy to close the gap. Today, however, was the one that actually did do. I'm just saying. In any case.....

Yes, it was a painful open today for American Dairy, Inc. Look what happened immediately - and I mean immediately - after the opening bell though. It's been nothing but buying. Folks, somebody (or a lot of somebodies) was waiting in the wings to snap up ADY shares at a great price. The volume's already been huge so far today, and we're les than halfway through the session. Call me contrarian, but I think this small cap stock is actually a great speculative buy at this point.

----------------------------------------------------------------------
Sign-up for Free to Receive Future Commentary
and Trading Alerts on ADY, FDS, and BKTK.
----------------------------------------------------------------------

Yes, I know the news out today is the suggested reason Black Tusk Minerals Inc. (OTC:BKTK) shares are deep in the red. I think, however, that was just an excuse to justify a sharp reversal of the BKTK uptrend. It's not like today's news was a big secret or a surprise.

In any case, what we're seeing from the BKTK chart today is a major outside day reversal, where the open and close from today's bar completely engulfs (and opposes) the prior day's high/low range. For that matter, today's outside day from Black Tusk Minerals is an outside reversal of the prior three days, augmenting the intensity of the signal. Even if it were just a one-day event though, it would be enough. The volume spike is the kicker.

Yes, you have to take chart analysis with a grain of salt when it comes to low-priced and (very) small cap stocks, which clearly describes Black Tusk Minerals Inc. On the flipside, this technical analysis can't be totally dismissed either, as BKTK has enough volume and enough of a following to at least acknowledge the chart may be offering clues as to the next direction.

I know FactSet Research Systems Inc. (NYSE:FDS) is up almost 3% right now, and has been at much higher levels earlier today. I just can't help but to consider this a prime selling opportunity for FDS though.... and anything but a buying opportunity. The reasons why I feel that way, however, don't really register on my chart below. So...  

You can somewhat tell that there may be a ceiling for FDS around the $73/$76 range, based on recent history. What you can't see, however, is that the same ceiling goes all the way back to 2007. Translation? FactSet Research Systems are dealing with more than just a little turbulence - this is a major, long-term resistance area.

The other primary reason I'd be taking profits on FactSet Research Systems Inc. shares rather than stepping into them is today's volume. While it wouldn't be accurate to say the volume has been tepid, given the size of the jump this morning, the supporting volume from FDS was nowhere near what it should have been. On the same intra-day chart [I used 5-minute bars], you can see the second intra-day bullish wave from FactSet Research Systems is equally-unsupported by any level of meaningful volume.

Bottom line? The odds simply say there's more downside than upside in store here, despite today's effort.

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