A Look At Two Small-Cap Software Companies Roberto Pedone Likes

As usual, independent trader and technical analyst Roberto Pedone recently went over a few stocks he likes.

Opower

First off is Opower Inc OPWR, a small-cap cloud-based software provider that the analyst has included in his watchlist in several recent occasions because he loves the chart – he assures.

With earnings out of the way now, the company “looks ready to break out over $12 and make a run for that massive gap-down-zone from March that started near $15.50.” Pedone sees a short-squeeze coming if the breakout were to occur, as 19.5 percent of Opower’s 26 million float is sold short.

Support stands around the $11-$11.20 range, “but all we need now is a volume over $12 and then over its gap-down-day high right around $13 a share,” Pedone concludes.

Related Link: Pedone: Twitter, Alibaba Are 'Solid' Setups

eGain

eGain Corp EGAN is another stock that has showed up in Pedone’s list several times; the analyst has repeatedly recommended being long.

Related Link: 2 Tech Micro-Caps This Expert Is Watching

“It looks like the company’s time is here” as a large private equity firm, Vector Capital Management, started a 9.7 percent position over the last few weeks, the trader says.

“That was the flow for those block trades that got me involved in this stock. I own this already, in case you're a new sub, and it's in the portfolio,” he adds. “This is another low float play with a small 14 million float, and now EGAN looks ready to fill that gap over $4.20 all the way back to $5.”

Parets concludes, if eGain plays out like A. M. Castle & Co CAS, then the stock could be in for a multi-day move. However, “first let's see EGAN clear $4.20 with volume and get some momo into February's gap-down-zone,” he proposes.