China Energy on Course for Highest Volume Rally in Months
Remember everything I said in this morning’s newsletter about how well-paced the bullish volume had been growing for micro cap stock China Energy Recovery (CGYV)? Yeah, well forget it. CGYV is probably going to post it’s highest volume day ever today. That’s good news though… it’s buying volume, and has pushed the stock all the way up to some important ceilings.
In the newsletter, we specifically mentioned key resistance levels at $2.09 (last week’s peak), and $2.25 (November’s peak). Getting past the first one would be encouraging, while getting past the latter one would effectively mean hitting levels that were new highs seen by an audience that wasn’t distracted by the market’s implosion. (We actually saw higher prices in September, but our coverage literally began on the day the market started to unravel…. not exactly an apples-to-apples comparison.)
While we’ll gloat a little about how this chart is shaping up per our prediction, we’ll also counter that by acknowledging that a bigger move higher is hardly a foregone conclusion; there’s still plenty of risk, as always. On the other hand, they say the trend is your friend until it’s not. Well, right now - and until further notice - the trend is being very friendly to CGYV’s previous buyers.
Though prospective owners would be getting on board at a riskier and higher level (we’re not even going to bother preaching the ‘hesitation’ sermon), from a risk/reward perspective an entry here could still be justified. Just keep a short leash on things if you’re not one of those owners with a wide profit cushion.
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What parameters do we need to fulfill before a NASD listing can be seriously considered? Price, volume, earnings, # shareholders…etc. Thanks in advance!
Editor’s response: It’s still a little soon to start entertaining this possibility. I think it will happen, but I think there are many other concerns to address in the meantime. However, here’s the basic requirements for a true NASDAQ listing…
(This was ripped straight from Investopedia. The same data appears on the NASDAQ site, but is buried in legalese. This is the quick and dirty explanation you were wanting to know.)
The Nasdaq has three sets of listing requirements. The company must meet at least one of the three requirement sets, as well as the main rules for all companies.
Listing Requirements for All Companies
Each company must have a minimum of 1,250,000 publicly-traded shares upon listing, excluding those held by officers, directors or any beneficial owners of more then 10% of the company. In addition, the minimum bid price at time of listing must be greater than $5, and there must be at least 3 market makers for the stock. Each listing firm is also required to follow Nasdaq Corporate Governance rules 4350, 4351 and 4360. Companies must also have at least 450 round lot (100 shares) shareholders, 2,200 total shareholders, or 550 total shareholders with 1.1 million average trading volume over the past 12 months.
In addition to these requirements, companies must meet all of the criteria under at least one of the following standards.
Listing Standard 1
The company must have aggregate pre-tax earnings in the prior 3 years of >= $11 million, in the prior 2 years >= $2.2 million, and no one year in the prior 3 years can have a net loss.
Listing Standard 2
The company must have a minimum aggregate cash flow >= $27.5 million for the past 3 fiscal years, with no negative cash flow in any of the 3 years. In addition, its average market capitalization over the prior 12 months must be >= $550 million, and revenues in the previous fiscal year must be >= $110 million.
Listing Standard 3
Companies can be removed from the cash flow requirement of Standard 2 if the average market capitalization over the past 12 months is >= $850 million, and revenues over the prior fiscal year are >=$90 million.
A company has three ways to get listed on the Nasdaq depending on the underlying fundamentals of the company. If a company does not meet certain criteria such as the operating income minimum, it has to make it up with larger minimum amounts in another area like revenue. This helps to improve the quality of companies listed on the exchange.
It doesn’t end there: after a company gets listed on the market, it must maintain certain standards to continue trading. Failure to meet the specifications set out by the stock exchange will result in its delisting. Falling below the minimum required share price, or market capitalization, is one of the major factors triggering a delisting. Again, the exact details of delisting depend on the exchange.
Comment by Lewis — February 8, 2009 @ 9:13 am