(originally posted on Kudrna's Stock Market Blog)
Due to the recent news, I want to further update my readers tonight on what is transpiring with GoIP Global (GOIG.PK) and what action I am taking. Shortly after I posted my article on their website not being live yet and the stock gaining downside momentum…GOIG flipped the switch and turned the website live with about 20 minutes left in the trading day. The stock immediately moved off its lows to close almost even for the day. I believe if we had more time before the market closed, the stock would have jumped further. With the excitement swirling around GOIG, I expect tomorrow to have a strong opening that will continue for most of the day. We may meet some profit takers by the afternoon or Thursday/Friday though so be prepared.
As I’ve been saying, this is just an emotional catalyst that doesn’t immediately add to their revenue therefore the gains are not sustainable fundamentally speaking. However, this website is going to assist in preparing GOIG for the influx of buyers for day one of their Go800 service launch. I expect that to take place in March.
Now while this website is an emotional catalyst that isn’t sustainable, we are in a unique situation where Verizon (NYSE:VZ) is expected to announce by the end of the month (or sooner) that they are ready to handle GOIG’s service. That news should erase the final obstacle for the release of the service as AT&T, Sprint, and T-Mobile are ready to go. This news should also make the stock jump but again, is not sustainable because the service has not launched yet.
So that puts us in a tough situation on when to sell some of our position into strength and if we can expect to buy back shares lower OR do we just take a deep breath and let it ride. I find it hard to believe we will be gaining upward momentum from now until the service launch without taking a breather but that partially depends on when the official date is. If it is expected to launch the first week of March, we may have continued upside momentum from the Verizon news until the launch. If it is longer, we should take a breather at some point in time to where we can add some more shares prior to the launch.
Now a new twist that would be unpredictable is any Public Relations news between now and the Verizon news. With the website being recently launched, we could very well receive a PR statement from GOIG that could fuel some of the longs to keep the price momentum positive going into the Verizon news.
So what am I doing? Well I’m going to start paying attention to the charts much more to help determine if/when we might see a breather. We can’t predict now when we will take a breather but if we see some downside momentum after some significant gains, we could find some aggressive profit taking which is normal and depending on how much of a dip it is, we could buy back some shares at very favorable prices. You need to keep your emotions out of a stock yet most investors buy and sell based on emotional impulses. That means when they start to see the price tick down, they tend to overreact and panic sell creating a frenzy of sells. If I still believe in the company, that is when I will start to be happy to buy up cheap shares while everyone else is in a panic. When they realize the stock is going to rebound, they start to buy back what they sold therefore helping increase the newly acquired cheap shares. It is a very typical cycle to watch and if you stay aware, you will see it happen very often regardless of the stock you are in.
Before we consider selling some at new highs, we will need strong volume to boost us past current levels. I expect to see high volume starting tomorrow morning. Looking at the chart, we have support around $.0025 and resistance around $.0043. We will need solid volume to push past that $.0043 and I don’t see that as being a problem with the positive news coming on board shortly.
I’ll also be paying attention to volume slowing down as that could follow with some profit taking. If volume starts to taper off, we could see a peak in the price giving us an opportunity to sell near the peak and possibly giving us the opportunity to buy back on a dip. Again, that all depends on the timing of news as this is a very news-driven stock at the moment. So it is very hard to predict what will happen with much certainty.
Either way, I’m very bullish on GOIG and will be paying very close attention to what else transpires. Pay attention tomorrow and over the next week and a half as we know what news to expect so anything less than that could be devastating to the stock for the short term. Remember to buy in increments and sell in increments unless your belief in the stock changes and you want out immediately. Thanks for reading Kudrna’s Stock Market Blog and be sure to tweet this, digg this, or just copy and paste it elsewhere to share the wealth with others. See you in the morning. Good luck out there.
Disclosure: Long GOIG.PK but positions can change at any time