EDGE TRADER

Tuesday, March 14, 2006

IIIN

Insteel industries is a very strange security. This type of accumulation has got to be unsustainable. Every day it seems as if it should break down due to the steepness of its advance. But, trying to short it would have looked sensible any day for the past 2 weeks. The funny thing is that the effect of doing so would be like trying to step in front of Amtrak's ACELA train and get it to stop.

Something is going on with this stock. I am not sure what. Accumulation by a mutual fund, hedge fund, etc. or possibly a quiet buyout by a private equity firm? Or just trader mania? No SEC filings to indicate someone has bought 10%. With only a 10 million float, that wouldn't be hard to do.

Regardless of the why's, the action seems to be to continue to enjoy the upwards rise, and modify stops on a daily basis.

A true technician would be concerned with the steepness of the advance, but simple charting is missing the key to this stock; the low float. Trend charts look different based on volume of shares traded. If someone bought 5% of Apple computer today, it would go up. That has been happening approximately 8 out of the past 10 days in IIIN.

10 Comments:

At 11:14 AM, Blogger Ron Sen, MD said...

By any criteria, IIIN's move has been extreme. Currently, it has daily price volatility bands of 1.6 (one standard deviation).

Not standing in the way, but curious indeed.

Best,

Ron

www.ronsen.blogspot.com

 
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