Blocked and busted?

Blockbuster (BBI) on the move this morning. I haven't touched a sub-$3 stock since Fannie Mae, which is as bottom-of-the-barrel as it gets. BBI has an earnings report after the bell today and traders have moved BBI in recent months since a major selloff in mid-January. BBI closed yesterday at 0.46, dipped to 0.4426 early today, and has since climbed to 0.54. It's an entertaining watch, but getting in is a whole different story. Taking a position based on any old price just because BBI seems cheap is foolishness. I'm not against a very small speculative position. But these specs are in the barrel for a reason, and they'll run down on the slightest whiff of bad news, far faster and lower than a $50 or $100 stock.

Whatever the case, an orderly, sensible entry point is worthwhile if this spec is to be played. This is for today's movement only.

BBI: day high 0.54, day low 0.4426

38% retrace: 0.5028

50% retrace: 0.4913

62% retrace: 0.4798

Go back to the day (Jan. 20) before the most recent selloff, and it looks like this:

38% retrace: 0.58

50% retrace: 0.52

62% retrace: 0.45

That 0.58 level is where the recent run stopped and reversed back down, and the 0.52 level is where BBI is hitting a ceiling today. Some good news in today's CC would likely push BBI to the 0.70-0.79 level. Anything less than spectacular news might take it to April levels below 0.30.

Will Blockbuster really compete with Netflix and Coinstar one day? Just that possibility might be enough to push shares up more. BBI has doubled in little more than a month, but with $1 billion of debt, getting over a buck per share and staying there will be rough.

Another perspective: Take BIDU, which split 10:1 recently. It went from 620 to 710 in a day (two weeks ago). Percentage-wise, it's the same as a jump from 0.62 to 0.71. Yesterday, BIDU's split went into effect, and from a pre-split perspective, shares went 710 to 790; today, up to 820 ... or in terms of percentage gain, from 0.71 to 0.82 in a matter of two days. It's all the same no matter where the decimal point is.

BBI has gone from .25 to .51 in a month-plus, same gain if it had gone from 25 to 51 or 250 to 510. Caution advised.