Yesterday in my morning SteadyTrade Team webinar, I was forced to choose my number one watch between two similar stocks…
TransCode Therapeutics, Inc. (NASDAQ: RNAZ) became my number-one watch. Even though ESSA Pharma Inc. (NASDAQ: EPIX) turned out to be the biggest gainer.
We’ve all been there as traders — you picked the wrong stock to watch…
And maybe you missed out on an opportunity.
So today I’m sharing how I came to my decision about my number one pick, and the signs that can show you when it’s time to adapt.
Three Things I Didn’t Like about EPIX
First, what I didn’t like…
Both RNAZ and EPIX are in the same sector … And they both had news.
But RNAZ had a lower float of fewer than 9 million shares. EPIX has a float of 38 million.
That was the main reason I didn’t pick EPIX as my number one. But there are a couple of other things I didn’t love…
EPIX is a sketchy biotech. They’re not my favorite.
They’re good for quick in-and-out trades if you stick to a pattern and your stops.
But RNAZ was also a biotech, so they both failed in this department for me.
Low Premarket Volume
Like I said earlier this week, one of the main factors I’ll consider when picking my number one watch is the volume relative to the float.
Since EPIX has a higher float, I didn’t think it had the potential to run as much as RNAZ based on the premarket volume.
But when the market opens — all that can change…
Three Things To Like About EPIX
While those three things gave me a bias against EPIX, there were three things I did like about it…
It Had News
Although sketchy biotechs aren’t my favorite sector to trade, they can have incredible moves on news.
And news about scary diseases moves stocks. EPIX had positive Phase 1/ 2 study news for its lead prostate cancer treatment.
The Breaking News Chat alerted the news an hour before the market opened when the stock was trading at $2.10.
Once it spiked in premarket, Oracle picked it up as one of the top 20 stocks with the potential to explode…
It Was on Oracle
EPIX was on Oracle with a signal price of $2.19. (The next resistance level shown on Oracle will change as it breaks through those levels.)
Like I say, Oracle loves dip and rips. The $2.19 level was just below the premarket high of $2.27 where I’d look for an entry in a dip and rip.
A Pattern Emerged
And a textbook dip and rip pattern emerged a few minutes after the market opened.
So although I didn’t love EPIX in premarket, when the market opens — price action is king.
EPIX was trading above VWAP at the open. It consolidated, then climbed higher and hit the Oracle signal. Then it consolidated again near the premarket high level…
You had a few minutes to get in when price action showed it was holding up through multiple areas of consolidation.
And as EPIX climbed higher, so did the volume…
And by the time it retested the $3 high of the day and broke through, it had almost rotated its 38 million float.
That’s a good indication that taking the high of day break trade could offer a good risk to reward.
This is what adapting in trading looks like.
Just because a stock doesn’t look like a good potential trade in premarket, you have to stay open-minded to opportunities as the day unfolds.
Anything can happen in the market — breaking news can be released mid-day, volume can increase as the day goes on, and patterns can emerge.
Price action dictates everything.
You have to adjust your plans to it.
Having the right tools like Breaking News Chat and Oracle levels that adjust as the stock goes higher can help you with your decisions and plans.
Have a great day everyone. See you all back here tomorrow.
Lead Trainer, StocksToTrade
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