On the subject of trying to buy low/sell high; in this stock market, I still like bottom-fishing for beaten-up technology stocks; those stocks that are down—way down—from their highs. In 2008, the financial crisis created an excellent opportunity to buy large-cap stocks on the cheap. Large-cap, dividend-paying stocks were stock market leaders for the last three years, but this is now changing. The stock market is in the process of topping out and large-cap earnings are weakening.
While many large-cap blue chips were accelerating strongly over the last three years, a lot of small- and micro-cap technology stocks were left by the wayside. The marketplace just wasn’t interested, and as we know, smaller companies don’t have the flexibility to weather tough times like big companies. Right now, there are technology penny stocks that are turning things around, and sector-wise, broken-down technology stocks are a good place to search for trades.
One such company that’s recently improved on the stock market is 8×8, Inc. (NASDAQ/EGHT). This is a small telecommunications technology stock that’s been in the doldrums for quite some time, and is finally experiencing renewed momentum. The company is now growing its revenues and earnings again, and the stock market is recognizing the story. The company’s stock chart is below.
Chart courtesy of www.StockCharts.com
8×8 is exactly the kind of broken-down technology stock that makes for a great momentum trade. The company’s last couple of earnings reports showed real strength; the stock is highly liquid, with a following among institutional investors, and it’s cheaply priced because the position has been down for so long.
There is business growth out there, but it is difficult to find. Betting-wise, what I like in this stock market are small technology companies selling to big companies. Larger corporations have the cash, and what you want to find are small technology stocks in the businesses of selling to well-heeled corporate customers. Forget Main Street in terms of a customer base; we all know that growth at the retail level is stagnant.
The stock market is very vulnerable to correction in the near term, but because valuations are reasonable, I don’t expect a major pullback. Broken-down technology stocks are attractive for turnaround speculators in this market; investor sentiment is still strong enough for investors to momentum trade off events.
Article Source: http://www.pennystockdetectives.com/
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