Recently I was looking at how some of the small cap stocks have done after their huge rallies, especially those that were up on fluff news or plain momentum.
I see a common pattern in all of them and that is the trade I like to be involved in.
Lets look at some charts
ABIO spikes huge from 2.75 to 9.00 in one day. After that ? Slow and steady death. See how the volume keeps fading.
CDII doubles up in a week from 1.20 to 2.50s. After that ? Check again the drop in volume.
CNLG turns out to be bit tricky. Spikes, then drops, then spikes huge. After that ? Slow and steady death with few small spikes along the way.
ENCO was bit hard nut to crack. Spikes, then drops, then spikes again, and consolidates, and re-spikes and finally cracks. 
HMNA spikes on fluff news and momentum takes it higher. Up from 1.00 to 3.50s in no time. After that ? Where have you seen this type of chart before ??
IDN runs up on sector news. Squeezes the early shorts to trend higher from 1.25 to 4.00 with huge volume. After that ? Slow and steady death. No looking back.
IFLG same pattern. Spike, spike and after that, slow and steady death. Volume dies out
PRAN up on old news. Momentum traders take it higher. Huge volume. Next day ? Any guesses what is expected ?
RDCM spikes, fades, spikes, fades. Tricky bastard, but eventually going where it should be. I was lucky enough to short this one at @5.90, covering today @4.80. Definitely early, but I covered since they report next Monday. Playing it safe.
RPC spikes from 0.25 cents to 2.50. Huge runup. Once the selling starts, where does it go ? More fading expected. Volume fading perfectly.
SSY spikes from 1.50 to 4.50 (3x runup) on health care sector news. Nothing to do with SSY. Huge volume on runup. Once selling starts ? No where but DOWN
TEAR….no need to say anything more…you get the picture
ZANE is a fighter. It was doing exactly as expected. But it decides to spike mid-way. However it was short lived. DOWN she goes…
