The Monkeypox resurgence has been all over the news this week and last.
Monkeypox, now known more clinically as mpox, is not new, but recent outbreaks in various parts of the world have made headlines again.
In fact on Wednesday, it hit home for me, literally, as the first case of mpox was reported in the Detroit, Michigan area.
As usual, Breaking News Chat (BNC), was on the job with the Michigan news alert.
BNC is a financial news chatroom led by veteran Wall Street traders, each with over 20 years of experience. They get you the information you need before anyone else so you can trade on the events that matter.
Get ahead of the market with the news you can use!
As we’ve seen with past health crises, such as COVID-19, the market reacts swiftly to news of infectious diseases. And the reaction is often several times the norm in the biotech sector, where companies race to develop treatments and vaccines.
Why is the price movement in biotechs so exaggerated? These companies often focus on one thing which is working on niche treatments or therapies. When news breaks that aligns with their research, it can create a massive surge in demand for their stock, as traders speculate on the potential for a breakthrough.
But remember, it’s not really about how serious the outbreak is, (by the way, mpox is NOT another Covid), or if these companies even find a vaccine…It’s all about the news.
When health scares make headlines, the tiny biotechs are on the move!
To add fuel to the fire, many of these names are low float, low-priced, or even penny stocks, so the price action is naturally much quicker and greater than what you’d see for a biotech company like, say, Amgen Inc. (NASDAQ: AMGN).
With all that being said, we have several trading opportunities on the menu.
I’ve created a watchlist of low-priced names that follow a repeatable pattern, one that I see about every two years or so.
And because the price action that I see in these mpox stocks is repeatable, you don’t have to worry if you missed out…You probably didn’t!
All week, I’ve been advising on how to play the names on my watchlist… in my Premarket Prep, my Daily Double Down, and my other DailyIncomeTrader webinars.
Yesterday, it was the main topic of my StockstoTrade Advisory video. The Detroit mpox news had just come out, and I was chomping at the bit to share my watchlist and trading strategy with my subscribers.
To hear what’s on my Mpox Watchlist and others, subscribe to my StocksToTrade Advisory service.
My first piece of advice for playing these stocks is this: All bullish patterns should be applied…
Oh, and don’t have FOMO. What already happened will probably happen again.
Before you dive into the mpox mania headfirst, I think it would be wise to go over the primary technical indicators you’ll need to trade these names successfully.
Let’s Start With the Basics of Technical Indicators.
It really all boils down to price and volume. These are the most important technical indicators you need to understand. If you have anything on your stock chart it should be those two lines.
Remember, stocks that are trending up usually keep trending up, and stocks that are fading tend to keep fading. When a stock is moving up on high volume, that usually means buyers are stepping in to push it higher. These are the breakout stocks we’re looking for.
Japanese Candlesticks
Before you go adding a bunch of indicators to your charts, make sure you learn Japanese candlesticks.
Every stock charting service will allow you to monitor price as a line or in another style, like candlesticks. Always opt for candlesticks. They are integral to implementing your trading strategies.
Apple Inc. (NASDAQ: AAPL) Line Chart.
AAPL Intraday Line Chart; SteadyTrade
AAPL Candlestick Chart
AAPL Intraday, 1-Minute Candles Chart; Steady Trade
See the difference?
Read this article on candlestick patterns to get started.
After you’ve mastered candlesticks, price, and volume, you can move on to other indicators.
The Indicator I Use All the Time: VWAP
The first thing you should add to your charts, after price and volume, is VWAP (Volume Weighted Average Price).
VWAP is a momentum indicator that, as far as I know, 95% of day traders use. If that many traders are watching it, you should be too.
To keep it simple—if a stock is trading above VWAP intraday, it’s a bullish sign. If it’s below, that’s bearish. You’re looking to buy stocks above VWAP and consider shorting stocks that fail VWAP.
Read my recent blog post about using VWAP here.
AAPL VWAP Chart
AAPL Intraday, One-mInute Candles, VWAP Chart; SteadyTrade
Moving Averages
Next up are moving averages—simple moving averages (SMA) and exponential moving averages (EMA).
These are momentum indicators that many of us day traders rely on, especially the 200-day and 50-day moving averages. These tell you the average trading price over the last 50 or 200 days.
If a stock trades above these moving averages, it’s a bullish indicator and a potential buy. If it’s below, that’s a signal the stock will probably fail.
And for all the short traders out there, a stock trading below the MA can be a sign to initiate a short position.
AAPL Moving Averages Chart
AAPL Intraday One-Minute Candless Chart, Moving Averages; SteadyTrade
And If You Want to Add More…
There are a few other indicators worth checking out, but don’t put too much weight on them until you’re comfortable with the ones I mentioned above.
One is the Relative Strength Index (RSI). You should be aware of and study it, but only start adding it to your chart once you’ve mastered price and volume, candlesticks, VWAP, and your moving averages.
Another is MACD, which is really useful for swing traders and longer-term traders. Research it, but again, keep it simple at the start.
Less is More with Indicators
Employ the principle of KISS (Keep it simple, stupid) when it comes to indicators….
I mentioned four or five here, but there are hundreds out there. If you’re researching and using an indicator as a buy or sell signal, add one at a time and track its performance in your trade logs.
Don’t clutter your charts with too many lines. We’re not looking for a piece of abstract art here!
If price, volume, and VWAP are working just fine for you and you’re profitable, adding a bunch of indicators will not improve your performance. It will only create unnecessary noise.
It can also create confirmation bias, which is the tendency to interpret new evidence as confirmation of your existing beliefs.
Confirmation bias will destroy your trading strategy. It clouds all the relevant data you need to make informed trading decisions.
After all, anyone can add hundreds of indicators to their chart and make it look bullish if they’re long and bearish if they’re short.
If you want to use these valuable indicators in your trading, you need to have a robust trading platform to execute your strategies successfully.
You also want a system that will allow you to paper trade before you risk your own capital.
The one I use every day is StocksToTrade.
It has all the technical indicators, intraday data, dynamic charts, and stock screening capabilities that day traders like me look for in a platform.
Grab your 14-day StocksToTrade trial today — it’s only $7!
Have a great weekend, everyone. See you back here on Monday.
Tim Bohen
Lead Trainer, StocksToTrade
P.S.
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