Figures. We felt fortunate to find NeoMedia Technologies (NEOM) at the beginning of its upturn, attracted by its well-paced move higher as of October 14th. Rather than just quietly ride the trend higher though, today’s 40% surge is forcing us to turn our intermediate-term trade into something with a much shorter duration. Yes, that’s right - NeoMedia technologies is overbought, and ripe for a short-term dip. Here’s how we’re handing it….

First and foremost, we’re not complaining. We suggested NeoMedia shares on the 14th when they were trading at $0.142. At the current price of $0.20, our readers are up about 40%. We’ll take it.

Our grumbling is simply that the chart’s over-extended now, which puts the entire uptrend at risk. Sustainability is the key. The pace we saw then was sustainable. Today’s pop, however, isn’t sustainable, and may end up acting as a ‘final hurrah’ for this leg of the chart.

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————————————————On the flip side, the rising support line is still intact, and the volume is clearly favoring the bulls. In other words, don’t freak out just yet.

We advocate the hedged approach…. sell some now and lock in a short-term profit, but keep the rest just in case NEOM settles down, retest that bullish support line, and resumes its uptrend again. Just think of it as the best of other worlds. Of course, if NeoMedia Technologies shares slip under that support line, that’ll be the time to dump the remainder of what you own and enjoy the small profit on the entire trade.

All in all it’s not what we were hoping would happen, but that’s trading - a small win that could have been a big win is sure better than a loss any day of the week. If we continue to find enough of these high-potential, low-risk trading setups like the one we found with NEOM, enough of them will pan out to our advantage.

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