Happy new year everyone! I was kinda laying low for awhile and took some time off from looking at the market every day (which is very good to do from time to time). To update you from my previous post (back in October…..eek), I was still in on SPEX and had actually bought in a couple times more. My latest buy-in was at about .81.

While the stock wasn’t doing much to start the new year, Tendo mentioned to me that at the end of a trading year, most traders sell their shares to lock in their profits (or losses) for tax purposes for that year. Since this is a known thing, you’ll notice a lot of selling (or shorting) at the end of the year. These same traders hope that the price will drop so that they can buy in at a much lower price in the new year. SPEX closed out at .85 on December 27th, 2010 and didn’t close out again at that price until Jan 12th, 2011. I see some buying potential here.

Another confirmation of this is based on the SPEX chart below:
One month chart for SPEX

Notice the 4-day uptrend starting on January 10th. However, what I also want you to notice is the RSI (Relative Strength Indicator), which measures the momentum of a stock’s price movements and the speed it changes at. The RSI oscillates between 0 and 100, and it’s been known that anything over 70 usually signifies the stock as being overbought, while anything under 30 signifies it is oversold. So it looks as though SPEX may be a bit overbought right now.

My technical prediction: I’m looking for a high volume day tomorrow, but a narrow range of trading compared to the previous days. I feel we’ll see some gains, but not huge ones. If this happens, prepare for a red day on Monday. This is solely based on my technical analysis, so if major news comes out announcing, say, a major Pharma buyout, then up we go!

And of course, please do your own DD before investing in any securites.