General SP Trends: Bouyancy and Resistance at $0.25 & $1.00I've observed that there are few microcaps available priced between .50 and 1.00. Most are passing
through and don't stay long.
Of 24 companies I tracked who were priced between $0.44 and $1 at the end of 2015 (including VGO at $1.07):
- seven (incl. PHM) are now much lower (only 2 above .25);
- six remain at $0.68-$1.00 (4 higher or at par); and
- eleven are above $1 (most of them 2x-4x the value of a year ago).
- The stable few I have owned are DML, DAN, EBN, and TII.
Now this may show I am good at spotting winners ;-) but it is still a rather remarkable tendency, don't you think? It is as if the market does not like to leave a SP in that range. They become more or less bouyant once they reach these points, rather than just hovering.
Similarly tickers with a SP in the $0.25-0.50 range tend to move out of it. None I looked at in this range have exceeded $1 this year. Most are lower on the year.
I am saying that $0.25 and $1 are important psychlogical price points.
At the high end I could find only five companies to follow with an entry SP of $1.10-$1.95. Three held their value and I owned three of the four that have gone sharply higher. HEO ($1.10) remains lightly traded with great fundamentals, so the SP has been for some players to sell lower, but the SP has always snapped right back up again, despite trading just over $1 for months.
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Bombardier is special case, since the overall decline to my entry point at $1.30 was inevitable and the momentum lower was amplified by the market-wide double bottoms in January-February, when the turnaround was already underway. The market is seeing what I saw then only now. After piercing $1, Bombardier dropped lower quickly, but after this double dip the rebound was also decisively much higher than $1. In all that action the chance to buy at or near $1 itself was very short-lived.
What about .25 as a bellwhether? Clearly it is crossed a lot more often, by a large number of pennystock tickers. But when it is crossed a SP climbing higher is likely to keep climbing or hold higher and when .25 resistance is broken moving lower the trend tends to continue lower for months. Of 19 I followed with 12/31/15 entry valuations of .10-.25:
- five went sharply lower
- eight sharply higher (3x-9x!); and
- six have generally held near par.
Of these, 3 pairs demonstrate three tendencies:
CXV and PHM both dropped much lower after the SP broke below several times. I started buying them in that range, expecting .25 to the the floor. (Eventually I will be right).
EGT, CST, and HRT have all broken through .25 from long periods well below on sharp movements higher. Of these the CST peak was short-lived but I am holding and expecting a sea change.
For different reasons both TLT and ZMS are in prolonged depressed valuations, but have helkd above .25 overall rather stubbornly. My opinions of them are easy to find at this BB's. I am very bullish in one and regard the other as a speciulative high risk:very high ROE play. My point in naming them here is that they have held above .25, and not much higher, and if they do break free of the .25-.30 it will be for cause, and with blue skies beyond.
Of course fundamentals are the primary factor for a long-term change in value, but I am saying that the psychology of these price points seems to have a marked influence on the rapidity or resistance to SP shifts.
I invite others to comment on this thesis.