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Market Lab Report - The VoSI VooDoo Report - April 23, 2017 Edition

Published : April 23 2017 at 13:14 ET

The VoSI VooDoo Report


Offbeat Ideas from the Depths of Gil's Current Trading Notes


Airgain Technologies (AIRG) is an unusual situation. The stock had a massive, rapid run up that saw the stock launch on a massive 123% move in five days back on November 8, 2016. It has since blown apart and has spent the past five months trying to round out the lows of a potential new base. Over the past few weeks volume has dried up to severely low levels as the stock holds tight along its 50-dma. At the same time, the stock has posted several pocket pivots along the confluence of its 10-day, 20-dema, and 50-day lines. The most recent two pocket pivots have their volume lines highlighted in blue.

AIRG is expected to report earnings on May 3rd, and we wonder whether we will see some sort of buyable gap-up move developing after earnings. Another option, for those with a high risk-tolerance, would be to take a small position (5% or less) ahead of earnings in anticipation of such a move.

Mulesoft (MULE) is a recent IPO with a compelling business theme and an impressive client list. Do a little homework and read up on the company at its website: www.mulesoft.com. The IPO was priced at $17 and the stock opened up for trading on March 17th at 24.25, an instant 46.4% gain for anyone lucky enough to get a hold of some shares on the offering.

After the initial IPO frenzy, the stock has simmered down and gone about the business of building its first base. Here we see a typical undercut & rally move after the stock undercut the prior March 27th low at 21.80 six trading days ago on the chart. The day of the undercut shows supporting action off the intraday lows with volume picking up on the day and the stock closing near mid-range.

MULE's quiet period ends this Wednesday, April 26th, which means that the brokerage firms that underwrote the IPO can now issue research recommendations on the stock. We think this has a good chance of being positive for the stock. We saw a similar move in SNAP after its IPO quiet period ended March 22nd. MULE is expected to report earnings on May 4th.

Smart Sand (SND) is a recent IPO and a producer of fracking sand, but not just any fracking sand. As the company's name implies, this sand is "smart." We've always thought of sand grains as being smart as their much larger brethren, rocks, which is to say, "dumb." So while a name like "Silica Holdings" for a fracking sand company doesn't test one's sensibilities regarding the nature of sand, a name like "Smart Sand" does.

The company is happy to point out just how their sand is smart on their website, "But there is more to the story than the sand itself. Sustainable supply, massive reserve, quality focus, environmental sensitivity and efficient logistics through unit train delivery capability is smarter." So its not the sand itself, but the process.

SND debuted for trading on November 4th, 2016 and had a very nice run from there. After posting a pocket pivot on November 21st, it launched 96% higher over the next 13 weeks. It's final peak was established soon after a mythical "high, tight flag" breakout that failed miserably in late February of this year.

The stock then corrected severely and rapidly before finally managing to post a short-term low at 12.51 on March 14th. It then rallied back up to the 50-day moving average and rolled over. On Friday of this past week SND undercut that 12.51 low by posting an intraday low of 12.20 and then rallying back above it to close at 12.61.

This sets up an undercut & rally long play using the 12.51 as a tight selling guide, or the 12.20 low of Friday as a wider selling guide. Notice that the stock's chart, which uses my "Secret Weapon" chart template from High Growth Investor Software, is showing a second, thick, gray "Bingo" bar similar to the last low. The Bingo bar is an oversold indicator.

So with the stock setting up here as a U&R long trade that could also be the second low of a potential, future double-bottom base (keep in mind we're just extrapolating and theorizing here, but this provides a certain chart context that is useful), we might look for a trade back up to the 10-dma, 20-dema or 50-dma from here. 

Keep in mind that SND's fate is closely tied to the oil sector, which has been getting pummeled as of late. The selling may at this stage be getting a bit obvious, setting up the potential for a group bounce. If not, we know where our tight stop is on this well-defined trade. SND is expected to report earnings on May 11th.


This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2017 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.