Post # of 1432
This is a cut and paste from James Brumely--Small Cap Network
For veteran traders who've kept tabs on Sigma Labs Inc. (OTCMKTS:SGLB) over the past three months or so, it may be surprising to hear someone suggest it as a buy. Like so many other stocks of its ilk have done since the beginning of the organized market, SGLB went from (proverbially) zero to hero between late May and mid-July with a move from $0.025 to a peak of $0.118 only to fall back to the $0.04 level a couple of weeks later. It's the relatively common "one hit wonder", and if Sigma Labs followed the usual pattern of other small stocks that burned brilliantly for a few days, we wouldn't see anything particularly bullish from SGLB for a few months, if not years.
A funny thing happened on Sigma Labs' return trip back to irrelevancy, however. Rather than fade back into the funk it was in before May, SGLB shares renewed their strength. This second wind is not only a trading opportunity in itself, it may point to a much bigger brewing move... if the subtle clues are any, well, clue.
The chart of SGLB tells the story. As you'll see, shares were unusually hot beginning in June, fueled by some significant - and new - attention thanks to the company's participation in a retail investor conference. We later learned why Sigma Labs Inc. was suddenly so interested in a PR effort... it needed to raise money, announcing on July 24th it had raised $1.2 million. Yes, that dilution was the catalyst for the late June pullback - investors hate dilution (not to mention that the post-conference euphoria can't last forever).
Thing is, though dilution stinks, SLGB may well be one of the few technology companies that can actually turn that $1.2 million into more money for investors. That's what the chart's saying anyway, and we should take those hints at face value.
The first hint, aside from the fact that Sigma Labs is on the rise, is where the rebound took shape... right at the 100-day moving average line (gray) between July and August. Reversals that take shape at known support and resistance lines tend to be the real deal. The other big clue (and this one just appeared within the last few days) is the way volume is starting to grow again on the way up. With more and more participation rather than less and less, the effort has a good chance of lasting a while. Take a look.
There's till risk with SGLB to be sure, but that's nothing new - there's always risk. The odds here, however, are better than average given the clues we've seen thus far. The second wind moves often end up being the game-changer, for the better
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