When you look to buy a tech stock trading between $5 and $10, note that many mutual fund managers by their guidelines can't own stocks trading below that upper level, which is a reason shares tend to languish below $10 for a long period of time.
If there is a reason for a stock to fall below $10, expect to see selling pressure from the mutual fund managers. Once the selling subsides, and if the stock stays above $5, some speculation is merited in stocks that still have positive profiles. I believe a good strategy for members of this group is to buy tech stocks trading for less than $10, but to keep a sell-stop in case the stock breaks below $5.
Stocks from the Tech Five & Dime should be considered speculative. But they can be rewarding if you find the ones that can get back above $10 before they break below $5.
My model generated three attractive buys in the Tech Five & Dime:
A weekly close above my quarterly risky level at $10.03 should bring
( IWOV) back on the focus list for equity mutual funds that concentrate on technology. Interwoven provides enterprise content management software and services, and is a whopping 75.0% undervalued, with a positive weekly chart profile. Its five-week modified moving average is $7.73, and its 200-week simple moving average is at $12.43.
( MUSE) also develops software, and also is very undervalued -- 65.7% so. In addition, it has a positive weekly chart profile, with dynamics that again should put it in the spotlight: Its five-week MMA is $5.89 and its 200-week SMA is at $6.63. Weakness should hold my monthly pivot at $6.47, and a weekly close above $7.46 will put the focus on that $10 threshold.
Online media outfit
is less undervalued than the other two picks, at "only" 45.8% undervalued, with a positive weekly chart profile. The stock is between its five-week MMA at $5.19 and its 200-week SMA at $5.67. As long as the weekly chart profile stays positive, the next milestone would be a weekly close above the 200-week SMA at $5.67, which would target my quarterly risky level at $7.83.
If you have any other stocks you believe should be on the shelf of the Tech Stock Five & Dime, or any low-priced names that you'd like to see profiled, please
. I will cover them in next Tuesday's Tech Trading Diary on
Please note that due to factors including low market capitalization and/or insufficient public float, we consider Interwoven 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.
Richard Suttmeier is president of Global Market Consultants, Ltd., chief market strategist for Joseph Stevens & Co., a full service brokerage firm located in Lower Manhattan, and the author of
newsletter. At the time of publication, he had no positions in any of the securities mentioned in this column, but holdings can change at any time. Early in his career, Suttmeier became the first U.S. Treasury Bond Trader at Bache. He later began the government bond division at L. F. Rothschild. Suttmeier went on to form Global Market Consultants as an independent third-party research provider, producing reports covering the technicals of the U.S. capital markets. He also has been U.S. Treasury Strategist for Smith Barney and chief financial strategist for William R. Hough. Suttmeier holds a bachelor's degree from the Georgia Institute of Technology and a master's degree from Polytechnic University. Under no circumstances does the information in this commentary represent a recommendation to buy or sell stocks. While he cannot provide investment advice or recommendations, he invites you to send your feedback --
to send him an email.