Palisade Bio, Inc. (NASDAQ: PALI) kicked off one of the hottest biotech sector runs back at the beginning of 2023 … Can it do it again?
The stock soared 179% yesterday! And we know that once we get one big runner everyone starts looking for the next one…
So which stock will it be? Or will we see an entire hot sector run again?
Today I’ll share my insights on what to look for to help you spot the next big potential runner…
And the signs that could indicate we have a hot sector on our hands…
We already had another big biotech runner after PALI yesterday afternoon, so let’s break it all down!
What to Look For In Hot Stocks And Sectors
Let’s review the criteria that PALI had that made me like it enough to make it my number one watch…
First, the stock had a news catalyst. The company announced a license agreement with another company.
It’s a low-float stock and traded high volume.
But what I really liked about it was that it had cheap locates…
That means it was cheap for short sellers to get shares to short. And that can increase the number of short sellers that take positions in the stock.
Which can equal a bigger squeeze if the stock goes against them and they’re all forced to buy to cover.
And that’s exactly what ended up happening.
PALI chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
And since everyone is looking for the next big runner after PALI went wild…
We had another biotech stock spike a few minutes later…
NBSE chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
I made NeuBase Therapeutics, Inc. (NASDAQ: NBSE) my Daily Double Down pick yesterday afternoon…
The stock was spiking on a midday news announcement that another company took a 20% stake in the stock and was urging the board to hand out a $1 per share dividend.
It’s also a low float stock and high volume came in when the news dropped.
So it had the same criteria as PALI.
And looking at its beaten-down chart, it was probably loaded with short sellers too…
NBSE chart: 6-month, daily candle — courtesy of StocksToTrade.com
So these are the criteria I’ll look for in stocks going forward…
- Low float
- News catalyst
- Biotech sector
- High volume
- Lots of short seller interest
And how will we know if we have a hot biotech sector on our hands?
If all the biotech stocks start dropping press releases and all our scans are filled with biotech stocks.
Then we ride out the momentum as long as it lasts.
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Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade