This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bofi Charts: Long-Side Opportunity

By L.A. Little of tatoday.com, author of Trade Like the Little Guy.

Most of the names we've looked at over the past few weeks have been large-cap names. But there are a host of companies that trade in the micro- to small-capitalization area of the market and these companies offer great opportunities if you recognize the risks inherent to them and take steps to protect yourself.

For example, most micro- and small-cap names have high beta values, meaning the equity price moves around a lot more than the general market. Volatility isn't a bad thing in and of itself, but it cuts both ways. Another problem with smaller companies is that they typically do not have a significant amount of institutional sponsorship nor do they trade a large number of shares on a daily basis. This leads to large bid/ask spreads.

To trade smaller stock issues that share these traits, you have to do two things. First, you have to trade smaller. If your normal trade size is 4% of your overall portfolio, then you have to cut it down to 1% or 2% when trading one of these issues.

Secondly, you have to be able to withstand large swings in price and use that as an opportunity, not a failure. To do so implies that you will scale into and out of your positions always making purchase and sells at the extremes.

So let's take a look at one of these names where opportunity is abundant on the long side of the equation. Bofi Holding (BOFI - Get Report) is a consumer-focused, FDIC-insured, nationwide savings bank that primarily operates over the Internet.

Let's start with the long-term time frame at which we can see that BOFI is in a confirmed uptrend (see monthly chart above).

If there is anything to worry about in the long term, it is that the uptrend channel is rather steep, and a breakout of that channel should lead to a nice-sized correction when it finally occurs on a closing basis.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
BOFI $92.27 -0.50%
AAPL $130.28 0.47%
FB $81.53 -1.07%
GOOG $565.06 3.30%
TSLA $218.42 -0.08%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs