There's no question: It's been a tough market for trading, whether it's grabbing gains on the upside or the downside. With the S&P 500 off by 1.9% in Thursday's session -- less than a week after the Nasdaq attempted to confirm an uptrend with a heavy-volume gain of 1.3% -- it's difficult (to put it mildly) for traders and investors to latch onto a definitive trend.
Most stocks follow in the broad market's footsteps, so even most top performers got hit Thursday. Even before Thursday's market-wide selloff, breakouts had been struggling.
One stock that made an attempt was Apogee (APOG), which makes engineered glass and film coatings for industrial and construction applications. The company reported its fiscal 2013 first quarter, beating on earnings and missing on revenue, but issuing full-year guidance above analysts' views.
The stock gapped up at the open and hit resistance at $16.33. Market conditions Thursday did nothing to help Apogee's cause, and the stock gradually retreated throughout the session. However, it managed to finish without closing the gap, and it ended with a gain of 4%, at $15.76, near the bottom of its intraday range.
Apogee has been forming a fairly classic cup-shaped base for the past six weeks. If the market continues trending lower from here, the stock may form a handle formation, which could be a bullish precursor for further price gains.
This is a small, thinly traded stock that should be handled with some care. Its market capitalization is $445 million, and it trades only 169,000 shares per day, on average. It has a beta of 1.7 -- an indication of its volatility relative to the benchmark index.
Another small, thin stock was among Thursday's winners. AFC Enterprises (AFCE), which franchises Popeyes Louisiana Kitchen fast-food restaurants. The stock advanced 3% Thursday in above-average volume, to $21.78. This company has a market cap of $530 million, and it moves a very small number of shares -- about 91,000 per day, on average.
A weekly chart shows that the stock has been trading in a sideways fashion for the past four weeks, holding its gains after having bolted 15% higher on May 24 following its first-quarter report.
AFC has been trading above its five-day exponential moving average in recent sessions. As of Thursday's close, it was holding about 4% below its June 7 all-time high of $22.59. While the chart looks good, and while Thursday's price and volume action were encouraging, the market downdraft has put the fledgling rally in question. That means new buys should be avoided at this juncture.
AFC was not the only fast-food player to rally on Thursday. We also saw a quick rise in Nathan's Famous (NATH), which operates its namesake hot dog restaurants, as well as Arthur Treacher's Fish & Chips restaurants. This is an even smaller company than AFC, with a market cap of $126 million, and it trades just 8,800 shares a day.
On Thursday Nathan's rallied to an all-time intraday high of $29.29 on Wednesday, and an all-time closing high of $28.96. For traders who like the fast-mover potential of small, thin stocks, Nathan's is currently on a tear. However, know that the company is expected to show a year-over-year earnings decline in fiscal 2013.
Another red flag is the scant institutional ownership. Of course, you would naturally expect in a small, thin, stock such as this -- but when a stock has few institutional owners, that makes it more likely that one seller can send shares sharply lower when he decides to exit.