Stock: OTC Nasdaq Spring (SPRNG)
Recommendation: Strong Buy from 40-50; Add from 50-60
Price Target: 85
I put a new trade on yesterday — we are now long Spring SPRNG), and expect to maintain this position for a quarter or two.
Recall that we dumped our holdings of Winter (WNTR) late February; that is now a Sell/Avoid.
The Spring buy was a technical/cyclical call based on the 10 day moving average of its price temperature. It has been stuck in the 20s and low 30s for what seems like forever; it has had lots of difficulty breaking out over 40. But the past two weeks have seen SPRNG trade much better than it had been. It finally managed to get past that wall of resistance at 40. On Friday, SPRNG briefly touched 50 before falling back to the low 40s. Now that the 10 day moving average is over 40, we can comfortably accumulate more Spring in the immediate future.
This is an intermediate length hold — typically, 3 to 6 months. Based on a point & figure price projections, we believe this can be a double by the Summer — our 6 month target is in the mid 80s. Note that I would be a seller in the 90s and would short the hell out of SPRNG over 100.
We had lots of success with this same name last year, and though the seasonal patterns are well known, it still has not been arbitraged out of existence the way the January effect has.
Disclosure: Long SPRNG for clients and my own personal accounts