The markets had a nice bounce yesterday but there’s still a lot of fear out there…
Inflation is still sky high, interest rates will probably be high for a while, there are two wars going on overseas…
And I’m not even a doom and gloom guy. Those are just the facts.
You can’t ignore what’s happening…
But a lot of traders are getting too short biased now because of the macro news.
That’s creating opportunities for us on the long side. You can learn to identify these potential trades as early as premarket…
And there are four signs that can help you do that…
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Table of Contents
Learn The Signs of a Potential Trade
INVO Bioscience, Inc. (NASDAQ: INVO) was my number one watch yesterday morning before it had its incredible climb to $3 per share.
It was up a lot in premarket when I identified it as my number one watch. So I knew shorts would be all over it claiming “it’s up too much.”
But there are four reasons why INVO wasn’t a short setup.
These are also why the trade worked so well for long traders. So let’s dive in…
Low Float
INVO has a float of only around 2.4 million shares. That’s tiny…
Remember how the float can impact stock moves … The float is the supply. And when there’s a low supply of something people want, it makes the price go up.
And with a lower float, the price can move much faster because as shares are bought, there are less available for other traders.
News
Yesterday morning INVO announced a merger with another company.
That’s why it was gapping up in the premarket — it had a ‘why’ … A reason for traders to be interested and excited in it.
That doesn’t mean every stock with news will go up — that’s why we always have a trading plan — but it does provide a reason for more traders to buy the stock.
High Volume
INVO was trading high volume in premarket and it rotated its float in the first five minutes of the market open.
That shows me there’s demand.
So it was no surprise to me that INVO spiked right at the open and had multiple volatility halts…
The demand was high and the supply was low.
That’s a recipe for an insane move.
Monday Morning
This is a criteria not a lot of traders consider … On Monday morning you can see more explosive runners.
Traders come back to the market after a weekend off and they’re eager to lock in some gains.
Everyone’s looking for a trade opportunity. And most traders are long biased.
That’s why I think the two best days to trade are Monday and Friday. It’s also why I like to call it Money Monday.
Those are four reasons why INVO wasn’t a short setup.
And I’m not an anti short seller…
What I’m against is people shorting low floats with press releases and great volume in premarket on a Monday morning.
I don’t care if I INVO dropped to 50 cents after the market opened — there was no edge shorting a stock with those criteria in premarket.
It was basically the only low flow runner with float rotation.
But hey, those aggressive early short sellers give us an edge.
And we’ll keep exploiting it every chance we get.
Join me in Pre-Market Prep every morning to go over the hottest runners in the market and create potential trade plans…
Attend a free trading session to see how you can get in.
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Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade