Two Budding Breakouts: Can Liquidmetal Technologies (LQMT) & Gulf Resources (GURE) Get Over the Hump?

As nice as it would be if small cap stocks always reflected their underlying - even if changing - value, most traders know better. The fact is, the smaller the stock, the more perception and hype (and charts) matter. That's what makes Liquidmetal Technologies, Inc. (OTC:LQMT) and Gulf Resources, Inc. (NASDAQ:GURE) so interesting today. Each of these charts has suggested a brand-spankin' new uptrend has just started. Take a look.

When Gulf Resources, Inc. rallied back above its 200-day moving average line in January, the momentum looked compelling, but simultaneously looked overdone. Sure enough, the GURE bullishness backed off, for a couple of days, tried to regroup in early February, and then petered out again. Things got downright alarming late last week and earlier this week when the stock started leaning on the 200-day moving average line as support again.

Tuesday's bullish pop solved that problem in a hurry though, with GURE jumping $2.62 to a high of $3.25. That 24% surge itself was alarming though, especially with the gap it left behind. By the end of the day, shares were back to $2.87, at the lower end of Tuesday's range and poised to undo all that progress (and deflating the budding, albeit-flimsy, hopes of bullishness). Guess there was no need to worry after all. Though volume's been lighter, Gulf Resources, Inc. has been nothing but bullish today en route to back above the recent ceiling at $3.00. The rebound is underway again.

To really appreciate how big of a deal this is, take a look at this weekly chart of GURE.

As for Liquidmetal Technologies, Inc., the bulls let this cat out of the bag just today with the move above the 100-day moving average line, which up until this point had contained any rally efforts. The buyers actually got a much better start than it would seem though, with LQMT actually establishing a slightly-bullish support line (base) since mid-December, and actually using it as a springboard this week. Though volatility is still in the cards, the hardest of the necessary work has been done.

Like Gulf Resources, Inc., a great deal of the potential upside with LQMT has to do with the fact  that it had such a miserable 2011, but has since started to make a real recovery effort... .not just from a technical perspective, but also from a fundamental one. Liquidmetal Technologies, an amorphous alloy-based fabricator, announced a partnership with Materion Corporation late last year, and though revenue as well as earnings are still dwindling, the future's looking better (finally).