Sep 10, 2010 8:47 AM PDT
Actually, Somaxon Pharmaceuticals, Inc. (NASDAQ:SOMX) is the one small cap stock today that isn't a contrarian play - the crowd is falling in love with SOMX all over again, and has pushed it to within the brink of a breakout move. The key will be getting over the collective hump of the 20-day and 50-day moving average lines, at $6.97 and $7.01, respectively. If Somaxon Pharmaceuticals shares can make their way past that hurdle, there are no more ceilings until the February peak level of $10.60.
Despite NCI Building Systems, Inc. (NYSE:NCS) being up today, and up 27% for the week, the small cap stock is ranking as one of the most bearish names, according to the collective opinion of stock trading message boards. How does that happen? It's likely to be a case where those traders desperately need NCS to fall, because they're in short positions and can't get out. This week's surge is the second surge from NCI Building Systems in the last three months though, and pretty much cements the bullish technicals (a whole slew of moving average crossovers) formed in April.
Conversely, Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM) is a good shorting candidate today, as the collective opinion of the trading bards is actually a bullish one... despite the fact that TSEM is down nearly 5% today following a key downside reversal bar yesterday. Again, it's a case where the most recent buyers desperately need TSEM to keep rallying; these traders now realize they got in at a short-term top. However, the pullback developing from Tower Semiconductor isn't likely to stop until it re-finds the confluence of support around $1.44.
