MoSys Inc. (NASDAQ:MOSY)
MoSys Inc. (NASDAQ:MOSY) now has two claims to the nickname “The Big Mo”. Of course, their name lends itself to the moniker but lately the share price has also been rising at a strong rate without any accompanying news that could justify the price action from a valuation standpoint. Still, there can be little doubt that the stock is rising on the back of heavy buying. The question is – why? On the other hand, for momentum traders, who cares? Just ride it while it lasts!
Last Monday, June the 5th, MOSY shares began their upswing. Prior to that day, shares of MoSys Inc. (NASDAQ:MOSY) had not traded over 100,000 shares per day for weeks, and on some days daily share volume did not break 10,000 shares. But beginning on June 6th daily share volumes have been:
June 6 – 550,250
June 7 – 14,140,000
June 8 – 2,800,000
June 9 – 4,770,000
June 12 – 1,010,000
June 13 – 16,000,000 (a/o 1:30PM EST)
Less than a month ago, MoSys Inc. (NASDAQ:MOSY) hit its existing 52-week lows of $0.55. Today MOSY shares have traded over $2.50. MOSY shares have a long-term performance that is nothing to write home about – the shares have lost over 50% for the past year and are down over 30% YTD. However, the more recent share performance is remarkable. MOSY shares are up over 140% for the week and up over 95% for the month. That performance has attracted many momentum players who will ride the recent trend until they feel the ride is over. Importantly, the Relative Strength Index (RSI) for MOSY is 76.74. That figure does represent an overbought condition – but just barely. So there may be some more room left to the upside.
On the other hand, MoSys Inc. (NASDAQ:MOSY) released Q1 results in early May and the stock dropped on a reported net loss. Since that financial release, there has been no news that would justify the current upward swing.
Several things could be in play. One is a concerted effort to move the stock and force it onto the radar of momentum traders who will then make the move even more exaggerated. Or it could be an institutional player taking a major position. Also a possibility is the notion of insider trading on yet-to-be released material information. No doubt other possible reasons exist and, hopefully, they will become know. But one thing is certain, if this is a pure momentum play, the last one out of the pool loses.
I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.
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About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.