While everyone’s talking about the bank stocks plummeting and the Fed meeting this week — there are other themes at play in the market.
And those themes can offer better opportunities than following the masses.
Because in penny stocks, it doesn’t matter what the overall market is doing…
We can trade our repeating patterns.
That doesn’t mean there are guaranteed patterns and profits every day … You still have to adapt…
You have to know what’s working.
Because patterns and hot sectors can come and go…
And when one of your old patterns comes back into play, it’s like seeing an old friend you’ve missed…
You visit and get reacquainted, and everything seems right in the world again.
That’s what’s happening with one of my all-time favorite patterns. And in the last two days, it was the pattern that kicked off up to 42% and 57% gains!
So I think it’s time for a refresher on how to spot and trade it…
The Same Pattern Two Days In A Row
For months there was not a dip and rip to be seen anywhere — the pattern was deader than dead…
Stocks were spiking in premarket and failing.
Or they were chopping sideways and having afternoon spikes or day two or three moves…
But it looks like one of my favorite day one, morning patterns is back in action.
The first time a dip and rip played out this week was on Monday in Quhuo Limited (NASDAQ: QH).
It’s a sketchy Chinese stock (which is a hot sector) … And it was gapping up in premarket.
It was my number one watch for a break above $3.80 with a goal of $5. The stock hit a high of $5.40. (Get my next daily pick and trade plan here.)
But pay attention to the pattern that created the move…
I typically use five-minute charts, but you can see more detail on the one-minute chart.
QH chart: 1-day, 1-minute candle — courtesy of StocksToTrade.com
The stock consolidated sideways during premarket. Then after the open, it dipped slightly, then ripped back and broke the premarket highs.
That’s the dip and rip, baby!
Then we had a couple of stocks that looked similar to QH in premarket yesterday. Here are my notes…
9:20 AM Wow, $WAFU and $TIRX sure look like $QH yesterday.
Wah Fu Education Group Limited (NASDAQ: WAFU) was another sketchy Chinese stock that was gapping up and going sideways in premarket. It didn’t end up making a move after the open…
But Tian Ruixiang Holdings Ltd (NASDAQ: TIRX) did.
Yep, it’s another Sketchy Chinese stock…
And look at how similar the premarket action is compared to QH on Monday…
TIRX chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
The stock consolidated in premarket, then after the open, the stock dipped and ripped making a 57% move from the $5 break of the premarket high.
Remember, with the dip and rip we want to see a stock dip at the open, then take an entry if the stock breaks above the premarket high.
These are the patterns we look for daily. But dip and rips will eventually disappear again…
Then we’ll look for afternoon VWAP holds, or weak open red-to-green moves. And before you know it, dip and rips will be back again.
So learn to trade what’s hot and get familiar with all the patterns we look for so you can be ready when they present themselves.
I go into detail about the 10 patterns I look for in my ebook. You can get it as a bonus when you join StocksToTrade Advisory.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade