Summary: While still plenty of opportunities to trade this week, we did see a slight decrease in volatility versus last week. Of course, from a comparison sake last week was one of the more volatile weeks in lower priced stocks in recent memory.
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MGT Capital Investments, Inc. (MGT) –NYSE MKT
After being range bound for quite some time MGT finally managed to push through the $3.30 level with some solid volume. While initially thought to be a cybersecurity play this is now gaining traction as a Bitcoin related issue. After announcing come Bitcoin related appointments it quickly ran almost back to $4.00. Now later in the week it has faded back to that same $3.30 level. If it can hold this level and further news comes out, there is a potential for a continued move next week.
While no one ever wants to profit directly from a tragedy like the event in Orlando, as a trader you also need to be ready to make trades based on the price action around events in the news. Helios and Matheson was the security play rumored to potentially benefit from changes around the mass shooting in Florida. HMNY was already up big the week before the shooting and caught momentum this week. While there were many solid setups to go long this stock is very extended. Keep that in mind before making any trade plan.
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EXAS shot up quickly on a rumor of leaked news around some recent test results. As always trading rumors can be very risky but if you align potential news with a breakout around $8.50-$9.00 on buying volume there is a good chance a stock like this can scare shorts. Some of the best long trades are heavily shorted stocks. This was a perfect example of that.
BSPM is very analogous to EXAS in that it ripped up on above average volume and somewhat dubious news. But the freely traded float is very small on Biostar. We discuss this frequently in StocksToTrade Pro, but when you have a low float stock moving up, shorts and longs will trip over each other to buy creating truly parabolic moves. As you can see on the chat this has put in pretty solid support in the $5.30’s if it can hold this level it could be a multi day runner next week.
This is another heavily shorted and bashed stock on Twitter. Keep in mind many traders on Twitter can be solid follows for idea generation, but almost everyone will at times “Talk their book” just because a ticker constantly gets bashed does not mean it will crack back and reward short sellers. We saw a good example this week in Eleven Biotherapeutics. After a huge run last week it put in solid support at $2.00 and bounced hard off that mid week creating a solid technical buy. But like all small cap biotechs trade cautiously. The $2.30 level is now key for potential new support.