Updated with Little's new position
Small-cap names can prove quite lucrative for
. In particular, companies with a new stock exchange listing can offer significant opportunities. One such company is
, listed on
for about two years now.
Cardtronics owns and operates automated teller machines in the United States, the United Kingdom, and Mexico. The stock price recently has begun to register new all-time trading highs, and the price is in a confirmed uptrend on all time frames. In the long-term time frame, notice the volume expansion as price pushed into and beyond previous highs.
The weekly chart clearly exhibits this volume expansion with an unmistakable series of spikes in price. It's hard to question the bullishness of this chart.
On a daily level, it's a bit messier; that's the nature of small-cap trading. But again, the pattern is unquestionable -- each time a swing high is removed, volume expands.
The problem with a chart like this raises the question, "How do you gain exposure without significant risk?" The simple answer: You don't.
To buy here necessarily carries higher risks than if you had bought at the beginning of the year or even three months ago. The ideal buy area is back around $10 (see the long-term chart), but you have no idea if the stock will come back in or not so you simply buy a small starter position on intraday weakness and then wait.
If the stock does retrace, you add. If it takes off, you find another spot at some higher swing point to do it all over again by buying another small portion and waiting. It's the only way to gain entry without huge risk. Regardless of what it does (up or down after buying), you can then begin to implement the remainder of the trading plan.
That's the quick take on CATM from this trader, so, until next time, keep trading the charts!
Please note that due to factors including low market capitalization and/or insufficient public float, we consider CATM to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.
At the time of publication, Little was long CATM.
L.A. Little is an author, professional trader and money manager who writes daily on
, a free educational site for traders and investors. He has been featured in Stocks & Commodities magazine and is the author of