Sep 10, 2010 8:47 AM PDT
I've made no bones about my bearish view on small cap stock NexMed, Inc. (NASDAQ:NEXM). And, though it's been a wild ride since my initial call back in late April, the outlook has paid off - NEXM was at $0.40 then, and is at $0.29 now (though it was as high as $0.62 at one point between now and then). As we approach the $0.27 area though, I think it's time we started to reconsider the bearish outlook.
Why is $0.27 such a big deal? It was not only a low for NexMed in late December, it's been a make-or-break line for a great deal of the timeframe you can't see on our chart. So, the MO here is simple.... if this small cap touches $0.27 without going under it, or if we see a decent rebound bar, let's cover it. If NEXM blasts under $0.27, look out for round two of selling.
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I'll be the first to admit that I don't like the way KBR, Inc. (NYSE:KBR) did it, but I'll also be the first to admit that it's still done it.
And what is 'it'? This small cap has reignited a longer-term uptrend by pushing off a long-term support line ('the' long-term support line) that extends back to late 2008. In fact, it's done so twice in the last three weeks, sending a loud and clear message that the buyers have much more conviction than the sellers do at this point. I think KBR is prepping for an even bigger launch.
What I don't like is the size of today's move from KBR, Inc., and the fact that it left behind a gap. Given the overall bullish scenario though, I'll just have to deal with that.
And finally, I'm almost convinced that General Maritime Corporation (NYSE:GMR) is a screaming buy right now, here in the shadow of a complete bearish fakeout move, and a subsequent bullish outside day reversal.
It was only a few days ago this small cap fell under support at $6.76.... every reason to sell/short it, right? Today's even-lower open should have clinched its death, but take a look.....we saw a huge intra-day swing to the upside - on huge volume, no less - to form the classic outside day reversal bar. It's a perfect fakeout to jump-start the paradigm shift from bearish to bullish.
The one last thing I'd like to see from General Maritime Corporation shares is a move above the 200-day moving average line, at 7.60. It's been a problem for GMR before, so making sure we clear it now would make this a near-perfect setup.
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