Approach Resources Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of independent oil and gas exploration company Approach Resources (Nasdaq: AREX  ) shot up as much as 12% in intraday trading today, on higher-than-average volume.

So what: With no news out of the company today, there's little reason to believe there's any fundamental reason for the move. Earlier this month, Approach announced a hefty $100 million capital spending budget for 2011, and I suspect that investor hopes are sky-high that something big lies ahead. Shares have more than tripled since July.

Now what: If you salivate over screaming momentum, Approach's stock is right up your alley at present. A headline on Investor's Business Daily today reads "Watch for Continued Gains in Shares of Approach Resources" and specifically cites the "bullish momentum." If you ask me, though, momentum investing is a recipe for disappointment. Investors may be better served letting Approach's shares cool off before trying to handle them.

Want to keep up to date on Approach Resources? Add it to your watchlist.

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Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool’s disclosure policy assures you no Wookiees were harmed in the making of this article.


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