A reprieve for stocks in the 2013 dog house

Equity trading has been very interesting today as several underperforming stocks from 2013 find real strength.

Serial underperformer Borat Longyear (BLY) has seen a 15% surge today on news the falling knife that is its rig business is slowing. Mining services peer Ausdrill (ASL) is not far behind, adding 9% likely on the news from BLY, having lost 75% this year on missing of deadlines, suffering from cost blow outs and pipeline issues.   

Forge Group (FGE) is also having a positive day, having lost 92% four weeks ago on massive write downs, guidance changes and a capital raising. The stock has been on the up over the past week adding 25% last Thursday and today’s 6% move shows momentum and technical traders are adding weight to FGE’s change of fate. 

QRXPharma has added 12% on no news, with volumes well ahead of its 30-day moving average having lost just shy of 50% year-to-date and is one to watch over the coming trading day.

Echo Entertainment (EGP) has also seen a positive bounce adding 5% on news that The Star casino in Sydney will get a new MD after Frederic Luvisutto is set to leave his post after two of the most tumultuous years.

I am wary of these moves as they look like short covering and vector trading. There are certainly trades to be made here, however I would want to see if this pop is based on momentum or actual structure changes.

The moves in BLY and ASL I think will be short; any news the market is still in decline and profit will be locked in, the same can be said for FGE. If the trade reverses in any way I would be looking to short the stocks on the way back down.

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