Raystream (RAYS:OB) is an interesting play, despite it’s extremely young chart. RAYS has only showed legitimate volume for roughly a week, but some in the penny stock community are already anointing it the next Lithium Exploration Group (LEXG.OB).There are rumors that the same players are behind both deals, but for now it might be best to watch the tape action on Raystream for the next few sessions.

 For those of you who are unfamiliar with the LEXG reference, let me give you a few blurbs of information. Although LEXG proved to be little more than a lithium shell company, with some very fluffy PR’s, shares exploded to the upside and provided savvy investors with access to what proved to be one of the greatest trading vehicles in the last few years. However, those longs who were once green on the rade and others who bought at the top were smashed. Both quickly and violently

Raystream on the Forefront

 Now let me give you a few details on Raystream. They company has it’s headquarters in Dallas,Texas and is in the business of bringing a proprietary video compression technology to individuals and businesses. The goal of RAYS is to decrease bandwidth use and to maximize speed in regards to online streaming.

 On a fundamental basis, shares of Raystream do look a little expensive. The market cap is roughly $78million and they only have a little more than $2million in cash with slightly more in debt. So keep in mind that a double from these levels puts the company in the valuation neighborhood that small caps with earnings and revenue growth usually reside. RAYS has neither at this point.

 Does that mean Raystream can’t work for penny stock longs ? Absolutely not. Those who followed our LEXG profiles and alerts were put in a position to do well, and those who used the name purely as a trading vehicle were rewarded handsomely. You should use the same short term philosophy with Raystream if you happen to decide to go long.

 From a trading perspective, on it’s first day of the recent run, Raystream traded at a low of $1.05 four sessions ago. Today shares hit $1.70, and closed at $1.627 to show a small gain for the day. However, the dollar volume was impressive, eclipsing $5.8million which is enormous for any penny stock.

 So at this point, even though we generally give support and resistance levels on most names, you have to throw the charts out the window with Raystream, and to some degree fly blind. If a massive promotion begins and the same cast of characters from LEXG is behind RAYS, then you could see a nice trading vehicle emerge. If not, you could be looking at a dead penny stock for a long time. So watch the PR’s and more importantly the volume, and add Raystream (RAYS:OB) to your penny stock list for the time being.

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