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Are 'Phoenix' Stocks Getting Ready to Rise?

Strategy with phoenix stocks is to buy them at divergence signal using MACD. Then selling half of the stock holdings after they made a reasonable bear market rally.

With the current volatility; prices of phoenix stocks can easily run up 2x to 5x in a few days or few weeks.

Reward to risk ratio is simply very high at this stage. Buying a $2 stock can easily run to $4 to $10 in a very short period of time due to selling fatique and/or short coverings. Downside risk is that those companies can go bankcrupt in 6 months to 1 year as they continue to burn their cash reserves through the downturn while the credit crunch is still in effect. Selling half the stock holding at $4 or $5 and holding the other half for long-term investment effectively gives you a "free" investment.

For example: UYG or double long financials is now trading at $2 and change from it's previous high of $72.96. Based on Elliott Waves analysis; there is a high probability it has already completed a 1-2-3-4-5 run to the downside with low probability $1.60 as the limit run just in case the downside goes into extended mode. The upside is that it can easily jump to $3.83 just on reaction bounce and $6.95 if bouyed by good news such as if and when the Treasury releases it's Banks Recovery Program. For now traders may already be starting to price in the BRP as the $BKX and UYG failed to produce a lower low on Monday this week while $SPX, $INDU and $COMPQ made new lows last Monday.

Selling at $3.83 half of anything bought at the low $2 levels and holding half for long term investment effectively makes your investment closer to zero while still providing you with half the shares that has a tremendous upside potential. This is more true with beaten down stocks of C and BAC than any other banks.