Many traders may have been confused yesterday morning…
We had a huge gapper and big percent gainer running on news with a U.S. government entity — but instead of going higher, it tanked a few minutes after the press release.
So what went wrong?
The company didn’t do an offering…
If you thought it was going to be a big gainer all day and got excited about the news … Maybe you missed checking some of the boxes.
So today we’re gonna dive deep into this big runner and find out why it spiked so high but then gave back the whole move in premarket and the first few minutes after the market opened…
Table of Contents
Why ASNS Tanked On Government News
Actelis Networks, Inc. (NASDAQ: ASNS) announced that the US Air Force selected the company to modernize its Internet of Things network on a major Air Force base.
The stock spiked from $1.40 all the way up to $2.18 within a couple of minutes in the premarket — that’s a 55% move!
But after that, it couldn’t hold its gains.
ASNS chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
So even though it had news and it’s a low float stock, it wasn’t enough to spark a big run.
Let’s dig into the criteria ASNS was missing for a good potential trade.
Volume
The stock spiked quickly and premarket on good volume as you can see on the 5-minute candle chart above.
But after that initial spike, the high volume tapered off.
And when you zoom out over the rest of the day, it did have float rotation, but not the crazy kind of float rotation we like to see on a one million float stock.
As the day went on the volume basically disappeared and the stock couldn’t go any higher.
Chart History
A low float stock with news isn’t enough to justify a trade. You have to dig a little deeper into the stock, the news, and the chart…
When you look back at ASNS’s daily chart you can see that the stock has a history of one-day spikes and fails. It doesn’t hold its gains well.
And over the last year, there is no history of multi-day runs.
This reduces my conviction for a potential trade in any stock with this chart history.
ASNS chart: 1-year, daily candle — courtesy of StocksToTrade.com
Reading Past the Headline
If you read the company’s press release past the headline, you’ll realize that the press release doesn’t mention anything about how much money the additional work will bring the company.
It only says it will connect 41 sites within the base for data services. That makes it sound fluffy and makes short sellers eager to jump in and short it
The press release also didn’t use the word ‘contract,’ it just said the company was selected to provide services.
So we don’t know how much revenue this work will bring the company, or how long the work will last…
And there was nothing forward-looking to get excited about … The press release didn’t mention if there is the potential for more work after this set of installations is complete.
It would have been a better PR if those things were mentioned along with buzzwords that get traders excited.
Without those three criteria — ASNS was a dud.
Hopefully, you recognized it and focused on another potential opportunity in the market.
I share one exciting sector with you here.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade