Monday, 30 January 2017

Trade Alert: RGSE Could Hit $20 On A Run Similar To ETRM

This is a trading alert on Real Goods Solar, Inc. (RGSE). Last week the stock tanked on a 1-for-30 reverse split. It's one of these types of cash flow negative microcaps that is always looking for financing, but that hasn't stopped the market from pushing up many stocks of its ilk many multiples shortly after a reverse split. SAEX, DRYS, SGNL and GLBS are a few that come to mind over the last couple of months. But RGSE looks most similar to EnteroMedics, Inc. (ETRM).

On December 28, ETRM had a 1-for-70 reverse split, taking the stock from 4 cents to $2.80 equivalent. It sunk for about a week, but then from January 4th close to January 10th it rocketed from $2.09 to over $30 before settling in the $6's, where it is today.

RGSE has had a very similar pattern. On January 25th it closed at 19 cents. A 1-for-30 reverse split the next day took it to a $5.70 equivalent. After sinking under $3 it's picking up in price and volume today and sits around $4.60 mark. If it follows a similar pattern to ETRM, it could spike as high as $20. RGSE has only 1.2 million shares outstanding so it is very susceptible to incredible short squeezes like the aforementioned stocks.

Our suggestion if you're going to buy into this stock is to put small limit sell orders at many different price intervals. You don't know if this run is going to stop at $6, $10, $20 or even higher than that. So you want to be able to take some profits, but not so much that you leave the game too early.

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