While the broad market may not be spreading any bullish joy today, a handful of small cap stocks are. Take a look at MannKind Corporation (NASDAQ:MNKD), SGOCO Group Ltd (NASDAQ:SGOC), and Keryx Biopharmaceuticals (NASDAQ:KERX) for their potential. Here's specifically what's note-worthy.
Yes, Keryx Biopharmaceuticals is in the red today. In fact, the stock's pretty deep in the red for the month. Sometimes, though, you just have to bet against the trend and have faith that a reversal will materialize even though the current momentum doesn't act like it's going to let up anytime soon. KERX is one of those "faith" prospects right now, though there is a small (yet important) technical clue that the selloff may well be coming to a close.
Notice where today's low from KERX is? It's right at the 100-day moving average line. That brush with and bounce off of a key longer-term moving average means a little, but it means even more knowing the 100-day moving average line was also the pivot point for the October pullback and subsequent rally from Keryx Biopharmaceuticals. No, it's not the kind of trade you want to bet the farm on, but when you're talking about small cap biotechs, sometimes you just have to count on the reversal out of (seemingly) nowhere.
The last year and a half have been gut-wrenching - and mostly bearish - for fans and owners of MannKind Corporation. But, for those traders who are nimble enough to get in and out at bottoms and tops, MNKD has also provided some amazing short-term trading opportunities. Another one has materialized as of today.
As of today, MNKD has crossed above its 200-day moving average line, after hitting resistance at that key line a couple of times over the past three weeks. That key crossover, against the backdrop of a pretty strong rally since the October plunge, is apt to push the stock towards the $2.88 mark (if not better) if the past history on this weekly chart is any indication. Thing is, it's entirely possibly the longer-term undertow for MannKind has also turned bullish, given how we've also seen a higher low and a bullish cross of the 200-day line by the 100-day moving average line. See this weekly chart for that perspective.
Finally, nine times out of ten I'd steer clear of any stock that surges 78% in one day - it's just too much of a move to leave room for any follow-through. SGOCO Group Ltd is an exception to that personal rule of thumb. Though SGOC is going nuts (in a bullish way) today, I've got a feeling there's still a lot more upside in store here... once the dust settles.
Just as a preface before taking a look at the chart below, think "slingshot." In other words, think of SGOC as a stock that's been held in a retracted slingshot for several months, just waiting for the sling to be released and send the stock hurling. Yes, we've seen similar surges from SGOCO Group Ltd recently, to no avail. But, the bursts from April and November could be considered misfires. The fact that the bulls are willing to make another go of it now - after those two misfires - underscores just how badly they want to spark a rally here. And, the firm cross above the 100-day and 200-day moving average lines (on higher volume) today may well be the one that gets and keeps traction. After all, we've seen a string of higher lows since April, and this is the first time the 100-day line has even brushed the 200-day line in over a year. Something big is going on.