Trade Idea-PEIX Long

This falls in to the Cats and Dogs trades, they an move fast, but they are low priced and usually low volume, which explains why they can move fast. All speculative trades like this should have strict risk management, I almost ALWAYS cut my risk money in half on these.

PEIX has had a decent fall, but if we get the bounce like I still believe we will, PEIX could see a near term pop of 30% or more easily n a few days. This would only be a trade for a market bounce, nothing more and I like to take profits on these when they hit double digit returns.

So here's PEIX and why...

 The last trade we had in PEIX coming off a bullish descending wedge made nearly 300%, the stock can move, but that cuts both ways, so this is a speculative trade and risk management MUST reflect that. Wider then normal stops need to be used, that can be accomplished by lowering position size. Or you an run a very tight stop and use a larger position size.

 The longer term X-Over Screen is still long, I don't expect it to stay that way for a lot longer, but we are only looking for a bounce trade here. It has found support at the blue 22-bar m.a. which is where it should pullback to.

 The short term charts have been supportive and went positive leading to today's 6+% gain.

 Here you see the same, after weeks of confirmation of the downtrend, we have the first positive divergence.

 The 5 min chart's positive divergence was right on track shooting PEIX up higher today.

 Even the longer term 60 min chart that showed distribution at the top before the stock rolled over has also shown confirmation of the downtrend and now we have the first positive divergence here as well.

To the left you can see my custom demark based indicator give a sell signal, this is the first hourly buy signal and right as the stock bottoms and finds some support.

Again, this isn't a buy and hold, but the cats and dogs trades often pop off right before the market crashes lower. It's worth a look on a speculative trade basis.