MGT Capital Investments Inc (NYSEMKT:MGT) Is A Great Momentum Play

To say it's been a wild ride trading MGT Capital Investments Inc (NYSEMKT:MGT) is an understatement, but then what else would you expect from anything associated with John McAfee. The man lives life to the extreme and becoming CEO of a small cap tech company would be no exception. After rising to $5.58 on Wednesday and having squeezed the shorts all week, the stock pulled back to close at $2.62. The shorts took their victory lap on Twitter, but how much of a victory is it really?Here are a key points investors must understand with MGT. There are plenty of red flags with MGT. We've had paid promos, questions about McAfee's sanity, concerns about Kyle Sandler, worries over the true value of RecMed, McAfee's Presidential campaign, McAfee's Twitter account (he has a Donald Trump problem and his lawyers should take Twitter access from him), questions over D-Vasive's real value, Barry Honig's involvement, cashless warrants, and insider selling. We think we covered at least the main ones, but there are I'm sure plenty more.With the case of MGT, the current fundamentals really don't matter. Because of McAfee's involvement and his notoriety, MGT has become a cult stock. It has a legion of followers and haters now. The stock is moving purely on market psychology. Yesterday's pullback was an outside down day, or when the bar on a candlestick chart is both higher and lower than the previous day's bar. The shorts were declaring victory, but these were the same shorts saying the stock was a short at $.50, $1.00, $2.00 and they were finally right above $5. This is not how one makes money in the markets. Trading is not about being right. It's about making money. To make money with MGT, you have to trade it. It's a momentum stock that will trend higher or lower.In terms of where the market is likely heading, the thing we've noticed with MGT is that the short squeeze that was put in place over the last week was perfectly orchestrated. You had a paid promo, news releases, and the result was the massive move higher. We don't think it's over. The stock has pulled back and once it establishes its support level, it will bounce and it will bounce hard. The shorts that believed they had won will be forced to cover again and push the stock even higher.With all of this being said, do we feel MGT is a good long-term investment? At this moment, NO. There are too many red flags in our opinion and John McAfee has not proven he can build a winning company. Remember, he left McAfee Associates in 1994. Intel bought the company in 2010, 16 years after McAfee had left and no longer had anything to do with the company. McAfee is no Steve Jobs or Elon Musk. His track record at building companies is spotty at best. He's known more for his notoriety than anything else. The one thing MGT does give McAfee is attention and we know he craves the spotlight. The latest press release said:

In the past week, Mr. McAfee provided the keynote speeches at the Rocky Mountain Information Security Conference in Denver and at the Hack Miami Conference. "On a global level, people everywhere have become truly dependent on technology more so than anything else in the last 100 years. As this dependency increases so does the threat of vulnerability. It's something that I've seen in small business and in world governments. Through my new company, John McAfee Global Technologies (MGT) we are going to work vigorously on finding vulnerabilities in every avenue possible." (As previously disclosed, MGT Capital intends to change its corporate name to John McAfee Global Technologies, Inc. upon closing of the transaction.)

Currently trading with a market cap of $47 million, MGT is a great trading vehicle for momentum players. We urge our readers and subscribers to look at MGT with an open mind and play it from both the long and the short side. MGT has high volume, tons of liquidity, and a ready opportunity to make money. Making money is what this business is all about. Don't let this opportunity pass you by! Don't get caught into a conviction trade because no one knows how the MGT roller coaster ride will end. We will be updating Insider Financial as soon as we know more. For continuing coverage on MGT trade opportunities, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in MGT and have not been compensated for this article.