Source: Nice to see someone agreeing on something for a change. Take a look at American Superconductor (AMSC). It's doing a deal with BASF, and the stock is working. (March 08, 2016)

Nice to see someone agreeing on something for a change. Take a look at American Superconductor (AMSC). It's doing a deal with BASF, and the stock is working. (March 08, 2016)



I want to look at American Superconductor ( NASDAQ:AMSC ) here, and this is why: This stock is just coming out of a volatility squeeze and all systems are “go” as far as this being a reversal. They’ve got a really high short interest; it’s going to take the bears a long time to cover here. The reason the stock is up today, at least this is the reason given, is that they’ve got a new strategic relationship with BASF ( BIT:BASF ) to, basically, build a lower cost superconductor wire. And now I’ve told you everything you need to know, frankly. The bottom line is this: This stock, again, it’s a short squeeze, love these things. This has been in a downtrend for quite a while, and then we got a series of higher lows. And look at the 50-day moving average, that’s the red line. This 50-day moving average has been drifting sideways finally, and now it’s moving up. And this last pullback found support at the 50-day moving average.

So what are you going to do with this now? The bottom line is, the stock’s moving up, it’s been moving up, I think everything kind of gets factored in. Big, huge volume for this stock, a third of a million shares, so this is what you want to do: Zoom out and see that this thing used to be a heck of a lot higher, so it’s gotten absolutely crushed to a point where it had to do a 1-for-10 stock split, so this thing would be a penny stock as opposed to a single dollar stock. What you’ve got to do here is look at this in the long run, because short-term, I’m telling you, you’re risking a pullback to buy right here. It’s up over 10 percent just since this breakout from this last one here, it’s up 25 percent.

But here’s what I would suggest you do, because it is a short squeeze and sometimes these things can keep going: Take a small position, such that, if the stock pulls back you’re more than happy to buy some more. Because this has, like I said, it’s made the turn, this isn’t like a one day wonder here to where you’re afraid of getting faked into the stock and then shaken out. This has been going for a while so it’s really just a function of risk management. And then one thing that you can do is convert that 50-day moving average to an 8-day moving average, you can even make it exponential if you want. Then you use this as the reference for the original position, as long as the stock stays above it you’re in. If the stock starts falling below it, then be happy that you didn’t buy more. The bottom line is this: I think this stock is going higher but I highly doubt that it’s going to be in a straight line. So you make your trade by taking a small position, a starter position, just to get you in; and then if the stock goes up to $10.00 aren’t you glad you bought some at 8.69?