Two low float ideas for swing trading NL Industries Inc and SORL Auto Parts Inc - Second Edition 05-30-2017

Markets are continuing to soar to records high as last week SPY broke above 2400. It's very likely that we will see SPY test 2500 in coming weeks and months if 2400 can hold based on what we talked about last week.


Two Low Float Swing Ideas

Let's take a look at another two low float ideas building upon the similar theme from last week where we explored ASUR - Asure Software Inc and COOL- PolarityTE, Inc.

We're looking to identify opportunities that have a low float i.e. less than 10 million shares available for trading and are exhibiting bullish sentiment along with a positive news or earnings.

A word of caution - Low float stocks will very likely make wild moves so you have to be very careful with your position sizing and never sit on a winner for a long time and be quick to take profit.


NL - NL Industries Inc

NL enjoyed a nice bump starting late November on the back of infrastructure promises made by president Trump. After consolidating in 1Q and trading between the range of $6 - $7 stock tested $10 and currently was in a profit taking zone all of last week.

Despite the promise of spending 1 trillion dollars on infrastructure spending for next 10 years the current budget put forth by Trump administration simply sets aside 200 billion which impacts the sector in general, NL continues it's trend upward and reported 1Q profit.

If mid to high $7 holds and price starts to grind sideways, we will very likely see another test to $10 and possibly $12.50. $6 is a strong support and should be used as risk guidance. Short interest is relatively low or negligible and institutional holdings is fairly stable.

NL-05-28-2017

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SORL - SORL Auto Parts, Inc.

This low float Chinese stock has been on a tear since April netting roughly 200%+ in two months. It hasn't been on my radar since I filter stocks below $5 but it's worthy of a look now given the fundamentals and technicals. Most recently SOLR announced a 37.4% Increase in Sales and a Significant Increase in EPS and analysts (most prominently Zacks) have been dissing out strong Buy ratings in the past few weeks. In addition to that smart money doesn't seem to view stock negatively with a low (< 3% current short interest).

I see two scenarios playing out next week.

  1. Gap up & Run - If SORL gaps up on Tuesday and the demand continues with strong volume it's a good buy at those levels to ride this to next major resistance of $10.

  2. Consolidation - Given how far stretched Elasticity is we may very likely see some consolidation. We can see this either consolidate around $7.50 - $8.50 range next week or even $6.50 - $7.50 range if it falls below the up channel shown in the chart. If Elasticity continues to stay above .25 and Berserker stays above average i.e. 8 during this phase we will likely move up and test past weeks highs of $9.50 test.

SORL-05-28-2017


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That's it for now folks. Happy and Profitable trading for next week.

Finally, If you aren't already a member and you're interested in finding highly actionable trading ideas everyday like the ones in this blog post, sign up for an account at buysellshortcover.com, our new idea generation platform. We're offering a 15 day free trial and a deeper membership discount while we are still in open beta.

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Saadey (साँढे)

compsci background, high perf software engineer by profession, fintech fanatic, entrepreneurial, food lover, soylent, traveler, NBA fan, geek, and avid learner.

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