Another true penny stock took the spotlight as the big winner yesterday…
It climbed a whopping 180% in a straight-up move yesterday morning.
It didn’t have any news but it played out a pattern that my mentor Tim Sykes teaches…
And since Sykes is the master of trading true penny stocks, I’m sharing it with you today.
Yesterday’s big gainer was actually a combination of one of his patterns and a trading framework that Sykes teaches his students…
So today I’ll break down both and show you how they come together to create opportunities like yesterday’s 180% move.
I’ll even share where you can find stocks that play out this pattern and how you can get them delivered to your inbox every night. Check it out…
A New Pattern For Trading Penny Stocks
Yesterday MSP Recovery, Inc. (NASDAQ: LIFW) spiked 180% with no news. But it wasn’t a completely random move…
It followed a hybrid pattern between Tim Sykes’ first green day pattern and his 7-step framework.
Sykes’ first green day pattern is when a beaten-down stock has a news catalyst that creates a gap up, and then the stock trends upwards all day creating a green candle on the chart.
If the stock closes near the high of the day, it has the potential to gap up the next day.
Sykes likes to dip buy these stocks on the run-up and potentially hold overnight if the stock closes strong.
Sykes’ 7-step framework is more than just a pattern. It’s like the name implies — it’s a framework of how he sees most penny stocks play out.
Stocks don’t go straight up or straight down.
So the framework takes into account the bounces and secondary failures a stock can have along its life cycle.
Step four of the framework is the ‘cliff dive.’ It happens after a stock has a big run-up for a day or multiple days, and then pulls back.
That’s where Sykes likes to dip buy the panic and sell into the potential bounce that follows.
But Sykes’ millionaire student Matt Monaco has adapted this part of the framework and calls the secondary bounce a first green day (after multiple red days).
He likes to buy the trend reversal and ride the bounce to the upside.
Here’s how it works with LIFW as an example…
LIFW had a big run-up on Friday but then it pulled back for two days. That’s when Matt starts looking for the exact setup LIFW had…
He likes to look for big runners that pull back to have a first green day bounce.
That means looking for the stock to open or go green after a big pullback which can create big upside moves.
The bigger the pullback, the bigger the potential bounce.
Just like how LIFW went green yesterday and it spiked all morning — even going higher than the first-day move as shorts got squeezed.
LIFW was on my weekly watchlist for a break above 20 cents. But after the pullback on Monday and Tuesday, I thought my trade idea was dead.
You could’ve reused my trade idea from the watchlist, but using Matt’s approach, you could’ve gotten in as early as premarket yesterday…
That’s when LIFW went green and it went straight up.
Where Can You Find Stocks That Follow This Pattern?
Just like all the other big penny stock runners I’ve highlighted lately — LIFW was on Oracle yesterday morning with a signal at 17 cents.
Using Oracle, you could’ve caught a 58% move from the signal entry.
But an even better way to find stocks with the potential to follow this pattern is to join the Daily Income Trader system.
Not only do you get Oracle to help you spot stocks with the potential to explode…
But you also get Matt Monaco’s Midnight Madness watchlist every evening. His video and report watchlist show you the stocks he’s watching and the patterns he’s looking for the next trading day.
Attend a free live training session to see how you can get access to the Daily Income Trader system which includes live Pre-Market Prep webinars with me, the Midnight Madness Watchlist video and report from Matt Monaco, plus all the tools you need to discover and trade stocks with potential like LIFW.
Have a great day everyone. See you back here tomorrow.
Lead Trainer, StocksToTrade