SpongeTech Delivery Systems (SPNG) Breaks Out, Hits New 52-Week High
Though I’m always skeptical of jumping on a penny stock breakout, SpongeTech Delivery Systems’ (SPNG) has me curious. Maybe the time has finally come for this stock to be fairly valued.
Over the last three days - counting today - we’ve seen SPNG move from 3.8 cents to 6.5 cents, where it currently rests. If you look back through late March, you can also see that each surge has spanned about the same 2 to 3 cents.
Normally (based on the pattern), we’d be telling you to take profits right now and stay sidelined until it pulls back. And frankly, we think that’s the right thing to do now. However, there’s something drastically different about today’s breakout effort…..
The high of 6.5 cents today is also a new 52-week high. Perhaps just as importantly, a nagging resistance line - or perhaps resistance ‘zone’ - from 5.0 to 5.5 cents has been broken.
While I still suspect to see the same up and down we’ve seen since late March, I think now the ‘ups’ will come a lot easier, and the ‘downs’ wont be as severe. It was just a matter of getting out of that 18 month rut (which was rumored to be created by short sellers, though we could never confirm that with any data we saw).
On a more personal note, I’m glad to see this finally happen. We’ve been following SpongeTech since late 2007. Though our coverage officially ended in 2008, I’ve kept tabs on the company because it’s one of those stocks you cheer for… simply because the underlying success is there.
Don’t get me wrong - I’ll sell the daylights out of it if the stock gets a little overextended. At least the visionaries are finally being rewarded for their patience though.
If you’re curious, here’s all of our coverage and commentary for SpongeTech Delivery Systems.
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hype is 99% of the trade game. it just so happens in this case the company is exploding from unknown to global. the company has a future, so risk in spng is minimal. the wild card is talk of reverse split - good for the long term. but how will it affect your plans if you are holding at the split? based on expected earnings spng is worth 0.70, but they are well on their way to doubling expected earnings. my short answer, buy and sell often.
Comment by evan — 6/22/2009 @ 7:52 am
It’s at .18 today. I sold some at .15. How “high” do you feel it will move and why?
Editor’s response: How high will it move, or how high should it move? I think it’s gone as far as it can go for now, but I’ve been wrong before. The problem is, now the rally is all built on hype, so there’s no telling how far it could go…. it’ll keep moving as long as the hype is strong. As for whether it will stay there or not, that’ a different story.
This is a better idea of what and how I’m thinking….
http://community.smallcapnetwork.com/A-Theoretical-Valuation-for-Penny-Stock-SPNG/s/article/view/p/mid/2/id/23/
Comment by Bob — 6/11/2009 @ 7:15 am
Profits are great anytime. But you need to check out deal SPNG had made with CostCo and the MLBs and might want to hold some until results of these deals start to come in. Esp the CosCo deal could really spike sales revenue.
Editor’s response: Maybe. I still say it’s not wrong to lock some in anytime there’s a big gain… you can buy it back later (though possibly at a less advantageous price). Or in a case like this, I advocate selling half, and holding half - the perfect hedge. It’s ultimately the trader’s call. It’s not like I have absolute knowledge that a pullback is around the corner…..just a hunch, but I’m not always right about coin tosses.
Comment by Jim — 6/8/2009 @ 1:12 pm
Yesterday spng closed at 10.01. Should one sell and hang on for the ride. I’m new at this and am interested in your opinion.
Editor’s response: Short-term, sell it (or at least some). Long-term, I think it will move higher than 10 cents….. it’s just likely to move lower first.
Comment by Bob — 6/6/2009 @ 7:34 am
I bought Sponge Tech at .015, and now on 06/05/09 it closed at .11 for a nice 300 to 400% increase. Should I sell or do you think this is just a beginning for this stock. I am seeing a lot of advertising on TV, so it is getting a lot of exposure now.
Editor’s response: Honestly, sell some, and hold some. I think it’s due to much higher in the long run, but I also see a dip before that rally.
Comment by Derrell Huff — 6/6/2009 @ 6:05 am