I recently wrote an article on Syntroleum (NASDAQ:SYNM) highlighting how it had been rallying on increased volume and no news. In that article I detailed a list of events that could be occurring in the background that the market just didn't know about...yet. #2 on the list was news on the lawsuit with Neste.
2) SYNM is in a legal dispute with NESTE Oil. Unpublished good news on this front may drive SYNM higher.
Today, news on that front is hitting the headlines. It turns out that SYNM is filing a second lawsuit against Neste.
Syntroleum Corporation (SYNM) filed suit against Neste Oil Singapore Pte Ltd with the High Court of Singapore asserting its Singapore Patent No. 169053 entitled "Hydrocracking Process For Biological Feedstocks and Hydrocarbons Produced Therefrom."
The release of that news sent the stock up over 7% from about $6.61 to $7.10, and the stock has since pulled back to $6.95.
In conclusion, stocks that make big moves on increasing volume are often signaling that good news is about to be released. People in the know buy the stock early knowing that information is soon to be released. In this case someone in Singapore may have used the mosaic principle to put the pieces together anticipating that good news was coming, or insiders or others familiar with the case may have placed their bets early.
Bottom line, the recent stock strength may simply be a coincidence, but then again it may have been buying in anticipation of the lawsuit news being released. If the news was not anticipated, and the stock had been rallying for another reason, I would expect this news to be supporting of the existing rally. If the stock was rallying in expectation of this news being released, the impact may have already been discounted in the price, and the release of the news may actually represent an opportunity for investors to engage in short term profit taking and drive the stock lower. Only time will tell.
Disclaimer: This article is not an investment recommendation. Any analysis presented in this article is illustrative in nature, is based on an incomplete set of information and has limitations to its accuracy, and is not meant to be relied upon for investment decisions. Please consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author's best judgment as of the date of publication, and are subject to change without notice.
Disclosure: I am long SYNM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.