Fuel Systems Tops the Nazz

Fuel Systems Solutions (FSYS - commentary - Trade Now) is the top gainer this morning on the Nasdaq. The stock is up over 25% following last night's impressive third-quarter report.

Investors began bidding up shares aggressively in the premarket, sparking a powerful breakaway gap. The stock opened at new highs for the year and went straight up all morning on very heavy trade.

By the close of trade today I expect upside trade to eclipse the previous highs set back in May after the auto part maker's first-quarter report. This is quite impressive, considering that the stock has risen 100% since the May 8 open.

FSYS Daily (Nasdaq) -- Fuel Systems Source: TradeStation

The big move today is quite a turn around for FSYS in a little over a week. Last Wednesday, the stock was in the early stages of what could have been a major breakdown. It closed on Oct. 28 at fresh eight-week lows on heavy trade. The stock had taken out its 50-day moving average the day before, and the downside follow-through on Wednesday, a 10% loss, looked very ominous. But that was if for the downside.

The next day FSYS, on the heels of its Thomas Weisel Alternative Energy Conference presentation the night before, rebounded 11% as the stock stabilized heading into today's report.

The breakaway action today has left behind solid support near the $38 to $40 area. This is the level of an upper trendline that has been in place during the top formation over the previous two months. It also includes the highs of last November from where FSYS first began its huge breakdown that dropped the stock 75% in four months. I am not in the stock but will be very interested after a pullback to support. I expect the stock to trade up to the $50 area in the next few months.

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At the time of publication, Morrow had no positions in the stocks mentioned.

Gary Morrow is president of Yosemite Asset Management, LLC, a registered investment advisory firm in San Luis Obispo, Calif. He manages individual accounts through Charles Schwab and runs a long/short hedge fund. Prior to forming Yosemite, Morrow spent 12 years on the floor of the Chicago Mercantile Exchange trading foreign currency and interest rate futures. He holds a bachelor's degree in economics from Ripon College.