SUF - Pump and Dump??

Posted by downtowntrader | 1/22/2006 12:08:00 PM | 2 comments »

Initial Disclaimer: I have been in SUF from near 10 and continue to hold a position.

I hear there is a negative article on SUF in Barons this weekend, and I thought now would be a good time to explain why I like SUF and why I try to not be distracted by noise from the media and public boards. First, I trade on mostly technical patterns and my fundamental analysis goes as deep as checking IBD ratings on a company. I believe fundamentals can be decieving and I am not an investor. Also, it is almost impossible to really know a companies true fundamental story without being an insider. Because I am not a fundamental investor, the most important thing to me is the imbalance between supply and demand. Charts are the only thing in the markets that don't lie. Articles, reports, press releases, post's on a board, .... they all have prejudices by the originator and should be taken as opinion. Charts are facts. I'm not putting down fundamental investors as that is a perfectly acceptable strategy. The difference is that an investor must be willing to hold a long time for his fundamental analysis to weather the normal short term imbalances of supply and demand. I also have different types of technical trades depending on the time frame I am looking at. I trade mostly very short term, but I have a few stocks that I take a big stake in early, and then cash out some profits while I wait for the really huge move to develop. I then add on pullbacks. I believe that stocks that make the huge longterm moves have one thing in common; VOLUME. They all suddenly had an influx of volume that PRECEDED the truly large move. Someone knows something and despite any negative press or bashing, the charts can't hide the fact that someone who knows something is accumulating shares. I am posting a few charts below to show what I am talking about. I am not saying SUF will become as big a winner as these stocks posted below. The truth is, I have no idea if SUF will crash and burn or not. But I do know that SUF is showing a similar pattern to these stocks and therefore bears watching. The other thing that needs to be realized, is that all of these had severe pullbacks on the road to their current highs. They don't look so bad looking at the weekly charts but if you look closely there are some pretty severe drops for someone holding more shares then they should be. Another thing that most big winners have in common is an element of doubt and fear in the stock which brings in a large short position betting against it. They provide more fuel to the breakouts when they occur.

Volume patterns can more easily be seen in weekly charts IMO. The big picture can more clearly be seen and the distinction between up and down volume is also more clear.

BOOM: Look how boom volume exploded from near nothing as it started it's run. Boom had a couple nasty pullbacks, and I bet there is a long list of traders that are upset they got shaken out on those pullbacks.
TIE: They had a little more volume before the increase, but nonetheless there was an large increase each time it has taken a step forward.
HANS: HANS had a little mini run and then the volume poured in much like SUF did from 3-5 then volume poured in. HANS had some good shakeouts early too, but once the story was known, it was pretty smooth sailing.
Here is a daily chart of HANS from the period of the initial breakout.
Which brings us to my SUF charts. Here is the weekly chart which shows a spectacular jump in volume as it more then doubles in price. Look at how volume started creeping in before the move. Someone knew something. Is this a pump and dump... I would think not as the amount of the float has been traded many times over.
Here is my daily chart. This has been trending up at just a little over 45 degrees which is not too steep. Are we due a pullback, probably. I have support near 15 and I doubt we will drop below that in any pullback, however.. we could pullback all the way to 11ish or we could blow right through 20 and pullback later. We could also consolidate sideways. I for one, will wait for the patterns to develop and make my decisions based on the charts and not on hype and fear.
I apologize for this long winded post, but I think a lot of traders get shaken out without trying to determine what they are really trying to accomplish with a certain trade. If a trader is playing for a quick swing, then they should of sold SUF already, or at least taken partial profits. I will disclose that I have already sold my "traders" and will hold my core for the time being. If we get a dip, then I will be ready. If we continue to move up, thenI am happy with my position. I will only sell out of SUF if I see a complete erosion of the chart. Good Luck,


PS. Other stocks that are showing similar Volume patterns are MMUS, and possibly DIET, and HAUP. There are others but I think MMUS shows the most similarity as it has sustained the increased volume for 13 weeks now. If anyone has similar stocks, feel free to leave a comment.


  1. Anonymous // 10:36 AM  

    can u give us an update on suf; now down under 11, chart broken?

  2. downtowntrader // 5:26 PM  

    I will post an update on SUF tonight.