Bottom Fish Should Be Biting Into Year-End

The indices continue to trade in a very tight intraday range. Option expiry probably will keep things that way, but trading is likely to thin sharply as folks head out early to start the holidays. That can lead to the market being shoved around if some big fund or program trade is so inclined.

Like many others traders, I'm looking for setups that have some room to run next week. I'd be surprised if we don't have a generally positive bias in the waning days of 2007, which, combined with the completion of tax-loss selling, should give us some bottom-fishing type plays.

A bottom-fishing example that I've been active in is Flamel Technologies (FLML). It's a biotech that has sunk from 35 early in the year to around 10 now. There is a big short position and some recent good news.

That is the sort of stock that is likely under some pressure, due to folks taking their losses in the current year. It could start to move higher as that relents and short-covering boosts it further. There are lots of similar-type stocks out there that should present fairly low risk opportunities.

At the time of publication, De Porre was long FLML.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.