News Analysis date published New: 
Monday, January 9, 2012 - 15:30
New Date created: 
Tuesday, February 14, 2012 - 15:15
New Date last updated: 
Monday, January 9, 2012 - 15:30

A Portfolio Update: Too Much, too Soon

Monday, January 9, 2012 - 3:30pm

To make money in a churning market, you need to have firm discipline when it comes time to buy and sell. If you're watching a stock make a solid upward move, then it often pays to wait out the mini-rally, finding a more compelling entry point for that holding.

Case in point: Zoltek (Nasdaq: ZOLT), which I recommended on Thursday afternoon at around $7.70 a share.

Shares have spiked roughly 10% since then (congratulations if you bought when I wrote about the stock), and I prefer to wait and see if this stock comes back to the levels seen last week. It may never come back to those levels, and as a result, it's possible that I may not buy this stock at any point. (Recall that I wait two trading days after an investment idea is presented before looking to acquire shares for my $100,000 portfolio.)

It's unclear why shares are moving so briskly. Perhaps it's because investors sense that the company will release solid fourth-quarter results in about a month from now. Perhaps it's because this stock is heavily-shorted (with the short position equivalent to 11 days' trading volume), and short-sellers are covering some of that position in the face of the stock's relative strength.

Action to Take --> Regardless, I continue to think of Zoltek as a solid investment, but a questionable trade. Sharp upward moves have a way of reversing as momentum investors exit a stock just as fast as they entered it. In the interim, I will be delivering additional investment ideas in coming days. Make sure you don't miss a thing by signing up to have these articles sent straight to your inbox as soon as they're published. Click here to sign up.

Here's the Latest Snapshot of my $100,000 Real-Money Portfolio...

David Sterman does not personally hold positions in any securities mentioned in this article.
StreetAuthority LLC does not hold positions in any securities mentioned in this article.