Valence Technology: Uncanny Strength in a Down Market

Valence Technology (VLNC) has been VERY strong despite an overall market correction (see Market Update - DOW down 19%). Perhaps Valence's strength is due to being an "alternative energy play" at a time record crude oil prices have the overall stock market down about 20% from its 2007 highs.

click to enlarge


Will this "bull flag" pattern resolve to the upside as the pattern predicts? The stock is up over 20% in the past two trading days on news it received a "going concern" from its independent auditor. This is not news because it received the same certification in the past.

Also, Valence was added to the Russell 3000 at the close of the market Friday. Index fund buying could easily explain the strength these past two days.

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Notes

A going-concern qualification refers to a company's ability to continue to operate indefinitely. The company received a "going concern" qualification for the prior fiscal year as well.

From stockcharts.com:

1. Flags and Pennants are short-term continuation patterns that mark a small consolidation before the previous move resumes. These patterns are usually preceded by a sharp advance or decline with heavy volume, and mark a mid-point of the move.
   
2. Pennant: A pennant is a small symmetrical triangle that begins wide and converges as the pattern matures (like a cone). The slope is usually neutral. Sometimes there will not be specific reaction highs and lows from which to draw the trend lines and the price action should just be contained within the converging trend lines.

 More VLNC charts here.

Disclosure: I have been accumulating Valence in my newsletter (testimonials) and personal portfolios and have good profits already. In an attempt to increase my overall return, I plan to continue to trade around this core newsletter position now "on house money" as of this article. I expect Valence to be a very volatile stock only for those willing to accept very high risk.

Comments

[litts:]

Your comments on VLNC are right on! This will be one big WINNER!

2008 Jun 29 04:10 PM

[madoff:]

isn't this the one where the chairman is buying his own stuff and recording it as revenue?

2008 Jun 30 05:05 PM

[Stephanie G...:]

VLNC went from $1 to $4 after announcing an "order" from Tanfield they touted as being worth "$70 million in the first year" when in fact, the "order" has no minimum amount of product that is required to be purchased. Meanwhile, Tanfield's stock has imploded (from 120 pence to 6 pence) as they've overtouted their own prospects. VLNC is a $1 stock masquerading as a $4 stock.

2008 Jul 01 12:50 PM

[CPST1:]

The bump up is a new plant that will produce batteries for certain models of smithelectricvehicles....

That, an the renewal of the Prius OEM batteries (and others) that require replacement.

On the downside, the batteries cost upwards of $900 each.

Although, the objective is to replace the lead battery as we know it which many have already decried as obsolete.

Given the strength and renewal of car batteries it won't be long until the 48 volt system is standard and the 12 volt system is a thing of the past.

2008 Jul 03 11:36 AM

[jbomber:]

this site is a joke. how many of the analysts on here are actually real? "Liam Mulcahy" anyone?

2008 Jul 18 06:20 PM

[10Q Detective:]

The only act keeping the company in business is continued funding from its founder, Carl Berg!

industry.bnet.com/ener.../

2008 Jul 31 01:48 PM