A week and a half ago, not to mention a couple of months ago, I suggested Superconductor Technologies, Inc. (NASDAQ:SCON) was a budding bullish play worthy of your attention. I get the suspicion that while more than a handful of traders read my take, the vast majority of the people who read that commentary weren't as impressed with (SCON) as I was. That's fine. Yet, being a diehard - and perhaps being a glutton for punishment - this is one of those trading ideas I can't let go of, mostly because Superconductor Technologies refuse to give up. Thing is, the stock's given me some new bullish fodder to use since the last look back on January 6th.
First things first. SCON is, as the company name would imply, makes high-power-transmission hardware. The company's never been profitable. In fact, Superconductor Technologies, Inc. has watched its top line deteriorate from a little more than $10 million in 2008 to a mere $3.6 million for 2012. Over the past four reported quarters that figure has slumped to $2.7 million, with Q3's $3.45 million loss being a considerably wider one than the downtrend would have suggested.
So what's investable about that? As veteran traders know all too well, (1) nothing lasts forever, and (2) the market loves a story or a concept more than it loves actual results. And the story here, is drawing a crowd again.
That's my artsy way of saying the undertow is bullish, which makes it much easier to do this....
The reason I went bullish on SCON back on January 6th was because, after weeks of hammering out higher lows, the stock finally jumped above its 200-day moving average line. That's an undeniable sign that the long-term momentum had turned bullish. It's what's happened in the meantime that's leading me to reiterate that bullish call. And what's that? The fact that Superconductor Technologies peeled back from the highs hit the day of the break above the 200-day line (the perfect excuse and opportunity for the bears to knock it over), and rather than throw on the towel, the bulls came back fighting, using the 200-day moving average line as a springboard to rekindle the rally. This second wind effort pretty much cements the bullish undertow into place.
With all of that being said, I'd be kidding you if I said the weekly chart had nothing to do with my bullish call on Superconductor Technologies, Inc. The reversal that began in August of last year has been a surprisingly well-organized (read "involatile") effort. Such rallies tend to last, as there's not a lot of strong pushing and pulling that motivates people to lock in a quick gain or buy it up in spades after a dip. The even-keeled nature of the uptrend simply allows the stock to walk higher without too much attention. That could last for months, as long as the bulls pace themselves. And, when you take a step back and look at the weekly chart of SCON, you can see just how big of a deal the cross above the 200-day moving average line is.
Bottom line? Like the last big clue, I'm taking the renewed uptrend at face value, and once again calling Superconductor Technologies a buy.
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