I typically avoid trading stocks under $10 for various reasons. 90% of my trades are equities between $10 and $70. I have friends who make a killing trading these low priced stocks as they have deep knowledge and understanding of the associated risks and how these securities behave. But today I was compelled to share something I found with you. While I was in the prospecting engine reviewing ideas for next week's trading I kept stumbling onto stocks < $10 that look extremely ripe for short-term upside breakouts. For those of you who trade equities < $10, you simply can't afford to miss this post.
Here is the EXACT scenario I built in the prospecting engine to identify stocks ripe for explosive upside breakouts next week:
- Price: Less than $10 and above $1 (Not venturing into penny stock territory yet)
- Min Vol: 250K (500K is even better but we want to capture explosive stock during consolidation phase)
- Flux: I want risk & volatility of at least 8%, which means I should expect an intra-day move of 5% - 11% tomorrow. (maybe wider during pre-market depending on any news)
- Berserker: Minimum value of 9 because I'm looking for at least slightly above at-rest actionability for scenario inclusion. Keep in mind I'm always focusing my efforts on results with the highest "herd velocity," ideally ones with Berserker values > 15.
- Elasticity : We've set minimum Elasticity value to be 0.01 (above 0) as we're looking for stocks with confirmed positive price momentum (the bulls are in control).. or early shifts in momentum (solid punch up from negative to positive)
- Social: While our Berserker gauge uses cold hard math.. (rooted in a year's worth of price, volume, and intra-day volatility data) to quantify the relative craziness in a stock or ETF.. we want to compliment a high Berserker value with a high value in Social Gauge, which quantifies the strength of chatter/anxiety in social media around a stock or an ETF. In other words, how strong is the public's reaction to a stock or ETF's behavior at any given time. So in our scenario here, I'm looking for Social Gauge > 90. A value close to 100 indicates high levels of anxiety/excitement from the people with "skin in the game", not to mention the snowball effect of a high Social value .. i.e. - that short-term burst of eyeballs watching the stock and contemplating jumping in (longs and shorts alike) as it's getting more attention in various social media sources.
To Learn more about how to use and take advantage of our proprietary gauges; i.e. - Berserker, Elasticity, Flux, and Social... watch the instructional videos we created on our howitworks page.
Now that we have this scenario defined in our prospecting engine, let's take a look at what ideas surfaced:
Trading Ideas in Details
ZSAN – Zosano Pharma Corporation
FUEL – Rocket Fuel Inc.
The predictive marketing platform provider has soared since Feb 1st 2017 with a solid quarter and strong finish in 2016. The strength in the upward movement is quite noticeable. With the increasing volume, if $2.80 support can hold it wouldn't be surprising to see FUEL take out the next resistance of $3.20 and then $3.40 next week.
ZAIS – ZAIS Group Holdings, Inc.
The actionability factor of this chart is insane. The key thing to watch here is the Berserker score follow through and Elasticity indicating that the buyers are still in control. If the demand continues to stay strong and $2.50 continues to hold as support then $3.50 test or breakthrough is very likely in the coming weeks.
And here are few others from this scenario you can analyze in our platform. We encourage you to research each actionable idea further to understand the catalyst, story, and/or event behind each one:
- PHMD – PhotoMedex, Inc.
- CUR – Neuralstem, Inc.
- BCLI – Brainstorm Cell Therapeutics Inc.
- EYEG – Eyegate Pharmaceuticals, Inc.
- PTX – Pernix Therapeutics Holdings, Inc.
- NVFY – Nova Lifestyle, Inc
Alright, That's it for now folks. Happy and Profitable trading next week!
If you're interested in learning how to find highly actionable trading ideas everyday like the ones in this blog post, sign up for an account at http://buysellshortcover.com, our new idea generation platform. We're currently in open beta and there is no cost for using the platform during this time.
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