LQMT & AAPL Rumors

Bad news for LQMT: http://www.cultofmac.com/164378/purported-iphone-5-sim-tray-crushes-our-dreams-of-a-liquidmetal-iphone/

Update: LQMT looks like it will be a very interesting stock tomorrow so you should definitely have your eye on it in the morning. After dipping from it's previous highs based on the hype, the stock has rebounded based on renewed hype and a 0.3 million dollar financing deal on Friday. There is now the potential for both a double top and a breakout so be ready to play this both ways. The high odds trades though will probably depend on the breakout though because even if it double tops, a short carries the risk of a confirmation of apple news and a later breakout lacking some sort of catalyst to bring it down quickly. The breakout should be a good long and following a huge spike would also offer a good r/r short considering the many people trading this don't understand the mechanisms at hand here so the company probably doesn't deserve to be trading much higher than it is already all things considered. For instance, since the financing, the market cap has increased from 57.6M to 96M, a 38.4 million dollar change based largely on just that 0.3 million dollars. Such an overreaction is what makes this a potential short later on.

Liquidmetal Technologies Inc. (LQMT.OB) has seen a recent surge in attention due to the prevalence of a rumor that future Apple products will be utilizing the services/products that LQMT has to offer. While most blogs have chimed in to this buzz with their own cheery outlook on the company, I just wanted to add some realistic cynicism to the picture and remind people that just because a rumor is popular doesn't mean that it is anymore truthful. Bloggers just want to capitalize on people's interest (admittedly, myself included), so they write about the rumor which creates the illusion of added credence for each additional mention by other blogs.

I don't want to rain completely on the parade and tell everyone not to buy LQMT. Rumors are certainly powerful forces (as we have seen from this stock) and there is nothing wrong with buying into the hype so long as you have a good understanding of what is creating that hype and you take your gains instead of waiting to hear if the rumor is true or not. I'm sure some of you have heard the famous saying, "buy the rumor, sell the news." In this case, you ideally would have bought somewhere around 22 cents when the rumor mill was just starting to turn and volume was picking up, allowing for a nice breakout. At this point though, you need to be wary of how far the stock has already gone, and realize that your risk/reward is no longer fantastic. The hype could fade at any moment and the stock could begin to decline as investors realize there may not be any confirmation of LQMT partnering with Apple. Worse still, the company could release a PR commenting on the recent volume and declaring that they are unable to confirm or deny the rumor, which would likely cause the price to drop quickly enough to make exiting difficult.

That being said, the price could certainly continue to rise and for those of you with higher risk tolerances, it might be your kind of play. I only wish to convey the bigger picture here and urge people not to hold in the hopes that the rumor will be confirmed as doing so is a pure gamble and in order to stay profitable, you need to choose plays that give you good odds.

A potential play to keep an eye out for though if you would prefer something less risky, is an actual confirmation that LQMT and AAPL are in fact cooperating in the production of future products. My suggestion for tracking such an event is to set a google alert for the two tickers and just generally play close attention to the two stocks for any legitimate news issued by the companies themselves.