Momentum Traders Dive Into Ocean Power Technologies

For the second time in the past two months, Ocean Power Technologies Inc OPTT is making huge, high-volume trading swings. After the company announced last week that it has developed a newer version of its PowerBuoy, shares spiked 61.4 percent on Thursday and another 75.2 percent on Friday before opening Monday’s session down 15.9 percent.

Back at the beginning of June, the stock surged 300 percent in one day following news that Ocean Power had entered into its first commercial agreement with Mitsui Engineering and Shipbuilding.

Momentum traders that made a killing on Ocean Power’s June run up from around $1.50 to $6.79, then rode the stock back down to $2.33 by the beginning of July. Last week’s spike sent shares as high as $10.10 before the stock pulled back, now trading at around the $7 level.

If June’s move is any indication of what short-term traders are in for, Ocean Power could see a pullback to the $3.46 level in coming weeks. When the stock found support in June, it was at the level of both the 50-day and 200-day simple moving averages after a roughly 66 percent pullback.

The extreme volatility may be exciting, but long-term shareholders who believe Ocean Power’s wave energy technology could play a big part in the word’s transition to renewable energy are simply pleased with the stock’s 31.3 percent overall gain in the past year.

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Disclosure: The author holds no position in the stocks mentioned.