Daily analysis

Here are a few positive signs as well as some risks based on today's action.

The good stuff:

• Volume today was 1.12M, which is again quite a bit higher than the daily average. This not only puts pressure on short sellers (as mentioned in an earlier post) but also confirms the interest that traders and investors have in the stock. For there to be a continuation in the growth CNIT has experienced in the past few days, volume is key.
• The stock ended at the high of the day ($2.82). This is a very bullish flag, and may very well carry over into tomorrow's session. Let's not get too excited, however, as it's not like it carried into after-hours. Note, however, that with this kind of stock the spread during AH trading is usually pretty wide, which means AH trading is considerably less common than with more liquid stocks.
• After being pinned at $2.73-2.75 for most of the day, the stock moved up rather than down. After this period of consolidation, it could easily have experienced a small sell-off to retest a lower range.
• The 100dma is very close (currently at $2.89). This means if there's continued strength in CNIT in the next couple of sessions (or maybe even tomorrow), we could see it break past this. Note however that the 100dma, combined with the high $2s / low $3s where it traded for 1.5-2 months in April/May should be an area of non-trivial resistance for CNIT.
• The 50dma is close to reversing upwards. Today was the first day in a long time for CNIT that the 50dma did not drop (stayed at $2.27), which is of course due to the 7 consecutive positive sessions it has had. This is important because with continued strength it should eventually cross over the 100dma which would be a great bullish technical indicator.

Here are some potential risks to consider:

• The RSI for the stock (Wilder's) has now been in "overbought" (>70) territory for 2 days. It's only slightly above 70, and also note that it can stay here for quite a few session (and go higher) as the stock continues to build strength before stabilizing or correcting. Still, however, it's something to note.

• The volume, while above average, was slightly lower than yesterday (see the 1st chart). It's not significantly lower so I don't think this is a really bad sign, but typically we'd like to see continuation with increasing volume for the rapid uptrend to continue.

Ok, well that's it for now. I'm excited to see what direction the markets will take tomorrow!