So Close, Yet So Far - SSHS, MSN, and NEXM

Incredibly, stocks are up again today, adding to the impressive run we've seen over the last five weeks. How much further can that move before the weight of those gains proves to be too much? I don't know; I just know I don't want to be on the wrong side of the table when it happens. In any case, a few small cap trends - potential or otherwise - may be poised to do their own thing, independent of the market. Here's a closer look at Emerson Radio Corp. (AMEX:MSN), Safeguard Security Holdings, Inc. (PINK:SSHS), and NexMed, Inc. (NASDAQ:NEXM).

Color me surprised - probably more than anybody else - but NexMed, Inc. (NASDAQ:NEXM) has managed to not only stop its bleeding, but jump-start its own recovery. Though it's not quite cemented in place yet, NEXM is on the verge of becoming an outright 'buy'.

My bullish prompt here is two-pronged. First, take a look at the 50-day moving average line (which has been a make/break line for NEXM in the recent past). This small cap stock firmly moved above it today after a little bit of turbulence there. It's the second effort we've seen from NexMed, Inc. to do this within the last two weeks, both of which showed us some pretty strong volume.

My other prompt is the effort from NexMed to knock down the resistance side of what's become a horizontal trading range, between $0.43 and $0.54; there's a lesser ceiling at $0.51. Both ceilings are marked in orange; the floor is marked in blue. We've already seen higher lows from NEXM over the last month. A higher high would also mean the range had been bullishly broken, which should in turn unleash this stock's bullish potential. We're almost there, though remain prepared for volatility even if we get there.

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I'll admit that sometimes I can come up with some pretty complex technical reasons to be bearish or bullish on a stock. The truth is though, it seems like the simplest methods are just as effective. Such is the case with small cap name Safeguard Security Holdings, Inc. (PINK:SSHS) right now. I'm bullish on SSHS for about the most basic reason I can be.... a moving average crossover.

Actually, it's not just a crossover, but two of them. SSHS worked its way above the 20-day line on Monday - something it's been working on for three weeks. And today, we're seeing shares move above the 50-day line. On the flipside, I'd be surprised if we didn't see some waffling here.... several crosses back and forth these lines as traders figure out which stance to take. Be patient, and let's see if the chart can actually solidify this early hint by getting and staying above $0.0012.

That said, I'll also add that Safeguard Security Holdings shares have made a pattern that I think has been the deciding difference between failed and successful recoveries of late.....a slow, U-shaped reversal.

With very few exceptions, the V-shaped rebounds we've observed over the last few months have largely failed - a testament to the volatile nature of this market. The U-shaped reversals like the one we're seeing from Safeguard Security Holdings shares at this point (which took about two months to materialize, and it's still not actually done yet) have followed-through much better. That's not to say SSHS is something to bet the farm on, though I do consider it one of the strongest bullish speculations I've seen in a while. There's just too much persistent bullish volume to say something big's not happening.



I'm not even going to pretend to know where Emerson Radio Corp. (AMEX:MSN) will end up a few days from now. I do, however, have a pretty good idea of the clues that could line up to tell us that information within the next few days. Until they play out though, the best way to handle MSN may be from the sidelines.

It's no surprise to me that MSN is up a tad today.... it got crushed yesterday, and something of a dead-cat bounce could have been expected. That said, I find it more than a little interesting that Emerson Radio also stopped its tumble yesterday - and reversed - after it touched its 38.2% Fibonacci retracement level. That in itself isn't a show-stopper, but we can also see that the 61.8% retracement line had also been support as well as resistance within the prior five months. [It's not a coincidence, as Fibonacci extensions are just as common as Fibonacci retracements.]

So what? The 'so what' is that we now have a couple of big lines in the sand for Emerson Radio Corp. Granted, one of them is about 25% under this small cap stock's current price, and would inflict pain if it retested the $2.11 mark. We'll burn that bridge when we come to it though. For now, the 38.2% line at $3.13 is holding up, and I'd first like to give MSN the opportunity to establish a base there.

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