Why A123 Systems' Shares Jumped

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 A123 Systems (Nasdaq: AONE  ) jumped 12% today, continuing a wild streak for the company.

So what: To understand what's going on today, we have to go back and understand last week. The company announced a new technology called Nanophosphate EXT, a battery it says can withstand more temperature variation than the company's old technology. Shares jumped on Tuesday, fell on Wednesday, dropped on Friday, and are moving higher today. This is nothing more than the volatility of a low-cost stock after a big announcement with traders jumping in and out on a daily basis.

Now what: This could be a move from investors wanting to cash out short positions built on Tuesday, after the announcement was made. A123 still has a lot of problems ahead and I wouldn't count out bankruptcy. This is nothing more than another dead-cat bounce and I wouldn't buy here or until financials improve significantly.

Interested in more info on A123 Systems? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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