This is not an easy environment to be trading small stocks in. The market's overbought, and traders are very split on where things are going next. OceanFreight Inc. (NASDAQ: OCNFD), Antares Pharma Inc (AMEX: AIS), and OCZ Technology Group Inc. (NASDAQ: OCZ) are at the top of the "what's next?" list too. So, here's a little extra trading perspective for anyone who has a vested interest - now or soon - in these names.
Let's start with the outlook you're probably going to like least... the bearish potential of Antares Pharma Inc. This is one of those small stocks that the market just went nuts over in May, prompt a breakout from a converging wedge pattern (orange) and subsequent move from $1.88 to Wednesday's close of $2.30. Well, if you were riding that AIS train, I think it's time to get off... at least for a while.
But wait - isn't the trend your friend? Sure... until it's not. And as you can see of AIS back in June of last year, this isn't a stock that holds onto gains all that well once it gets this overextended. Note that, despite the fact that Antares Pharma shares hit new highs last week, the buying volume for the prior couple of weeks - while it was hitting new highs - was actually weaker volume than the initial breakout move. It's still in a longer-term bullish mode, but look for a pretty big pullback from here.
At first glance it just looks like OCZ Technology Group Inc. shares are wandering aimlessly. There's actually a little bit of rhyme and reason to what's going on here though. And, it's ultimately apt top fuel a major move. If my instincts are right, that brewing move from OCZ is most likely to be a bullish one.
This small stock is actually near the end of a fairly loose diamond shape pattern, which is just two triangle/wedge shapes places side by side; see the chart of OCZ to see what I mean. While flags, pennants, and wedges (and sideways consolidations for that matter) all set up big moves, this particular shape that OCZ Technology Group is making - in my experience anyway - has a little more potential than the average 'squeeze' chart. Just sayin'.
Finally, I know on the surface it looks like OceanFreight Inc. failed to make good on a breakout effort on Wednesday. Don't write it off yet though. Although OCNFD closed back in the middle of a fairly tall range yesterday (a sign of indecision), you really may want to take a step back and look at the bigger picture here.
And what's that bigger picture saying? Above all else, this small cap stock is (1) just plain-old oversold, and (2) the bulls are showing more interest than you may think. Check out the growing height of the volume bars here, and notice that OCNFD has at least closed above its 20-day moving average line, and even attacked its 50-day line (purple, at $8.17). No, it didn't clear it, but yesterday's close was much stronger than the open. OceanFreight Inc. actually has a ton of upside potential here, and it's starting to be unleashed.