Viking Systems Inc VKNG looks like an Outstanding Position Trade

The more I think about the most probable trading setups, the more I think that position trading is probably the most potentially profitable way to go because it allows you to participate in trends and ‘ride the bull’ so to speak instead of constantly pulling your hair out worrying about every little price tick.

Position trading is also probably the most gratifying because it allows you to take a somewhat more relaxed approach to trading and trust the trends.

I prefer to use a more flexible definition of position trading.  Perhaps most would say holding a position from 3 months to 1 year is a position type trade.  My view is that it could range from a couple weeks to a year.

But who cares about definitions.  It is more important to know when to position trade and when not to.  For me it all depends on the individual stock or index in question.  There has to be a compelling reason based on the chart as to why it would be best served as a position trade.

Viking Systems Inc. falls into the category of what I consider to be an outstanding position trade.  Viking Systems happens to be on the OTC BB exchange which puts it in the category of ‘highly speculative’.  I have traded many stocks that were on this exchange before and I can tell you that for the most part I barely cared that they were trading on the OTC BB exchange. 

More important for me is whether or not the stock has merits in terms of its price chart structure, volume relationships and other factors.

VKNG seems to have most of the elements I typically look for in a potentially outstanding position trade.  The technical analysis of Viking Systems Inc is outstanding right now and there is a fundamental picture that looks quite favorable as well going into October 3rd to 7th, 2010.  Admittedly I only skimmed the surface of the fundamental story, but I like what I see.  I recommend traders do some further good due diligence on this company.

Viking Systems is in the medical device sector and has a product they will showcase at the American College of Surgeons 96th Clinical Congress on October 3 to 7th, 2010.  There they will showcase their Viking 3D HD system, a tool for surgeons to do minimally invasive surgery in 3D instead of 2D.  According to Viking Systems they are the “only known supplier of stand alone, cost effective 3D vision systems” and “5% market conversion represents 100 million in sales”.

This is a very high priced product somewhere in the range of $80,000 to $90,000 a piece.  It would seem also that the market for this type of product is quite large as well given the huge improvements over 2D HD visualization in laparoscopic surgery.

You can read the company’s recent presentation yourself keeping in mind that obviously it is biased favorably towards the company.

The Technical Analysis of VKNG

The technical analysis of VKNG looks pretty damn good to me as a potential position trade into early October 2010, maybe even beyond that.  What happens typically is that you will see a stock trade INTO a key presentation date and then sell off on the news.  This presentation in early October is basically a big marketing push to a lot of surgeons who likely have very deep pockets.

So I suspect there will be a lot of excitement going into the event and then a ‘sell on the news’ situation quickly thereafter.  The company is in the final phases of development of this product and as far as I know has not started the assembly line so to speak to get this product sold.  From what I have read that should happen by the end of this year.

These low float type stocks tend to trade in a somewhat bi polar fashion.  They will trade all quiet and flat for a while and then burst in excited peaks and collapses.  So even if this type of stock is in a long term uptrend it can appear as though it keeps topping out because of the vertical peaks it creates.

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The most amazing fact about VKNG is that in October of 2009 it traded from .005 (half a penny) to $1 in just 14 trading days.  This is by far the most powerful amazing run I have ever seen since I bought my first stock in 1994. 

If you had bought $1000 worth of the stock at .005 and sold at $1, that $1000 would have been worth $200,000 near the peak.  Amazing.

Since that time the stock has had a mini crash, but it has developed a new long term base 3/4 of a year long at a higher level.

So we had a tremendous sign of strength at first and then a nice long saucer bottom base building formation.  Within this saucer there have been a few big volume spikes which I interpret as accumulation.

Today we had a nice big demand high volume candlestick which followed a different one that occurred about 5 days ago.  This stock is being accumulated now in my opinion.  It wants to move to a stage 2 advance after a stage 1 bottoming formation.

The other key fact about VKNG is that it has volume at the swing trading highs of November 17 and 18, 2009.  This is very important because it means that this level will be retested, and in my opinion likely eventually exceeded.

Even if it is not exceeded, a move from .30 cents to $1 is not a bad move at all.

Today we closed above the .28 range which was key resistance. I expect .28 to turn into good support now.  The next very key resistance is .38 . If .38 is broken then VKNG can move quite quickly to .70 because there is a large tradable void there with minimal resistance.

The weekly chart is showing an MACD buy signal.

There was some selling that came in end of day today but I consider it more significant that VKNG was able to break and close above .28 today.

To a certain degree this stock is somewhat ‘immune’ to the broad market pattern.  VKNG has a mind of its own and I expect that trend to continue going forward.

I am giving VKNG a confidence level of 1 per my perception of the chart (on a rating scale of 1 being highest and 10 being lowest).  A confidence rating of 1 represents my highest level of confidence at the time of this writing.  For me to remain confident in VKNG it must maintain prices at or above .28 in the days and weeks ahead.

At some point I will do another follow up on VKNG to see how things are evolving.

Posted in Biotech Stocks, Long Term Trading, Penny Stocks, Position Trading
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