There were two great premarket spikers to choose from yesterday…
Maybe you’re a seasoned trader that can manage multiple positions so you could trade both.
But most new traders can’t.
New traders have to learn how to pick the best stock to focus on…
The one that has the highest probability of running when the market opens.
And one that could play out a repeatable pattern.
That’s why I have a process that helps me focus on the highest-odds setups every day.
And it helped me pick my number one trade idea yesterday. I’ll show you how I concluded that one of these big premarket spikers was better than the other…
Even though both stocks had nice runs yesterday — it won’t always be like that.
And focusing on the highest odds setups can be the difference between a winning trade and a losing trade the next time you’re torn between two stocks…
How I Picked My Top Watch From Two Spikers
In the premarket yesterday I didn’t love Sera Prognostics, Inc. (NASDAQ: SERA).
It was up 120% when members in chat were asking me about it…
And we trade stocks up 120% all the time.
However, it wasn’t checking a few boxes for me — it doesn’t have a low float (it has 30 million shares in the float) and it didn’t have float rotation.
The other problem was that it went straight up in the premarket without a pullback…
How do you plan an entry when a stock is going straight up?
And is a straight-up move like that in high float stock a high probability? No.
Now you can argue that the premarket spike was a good opportunity (if you like to chase entries) … And yes, the stock did soar after the open…
But again, we’re not playing guessing games.
We’re trying to stack the odds in our favor.
And the premarket spike that SERA had was not typical for a higher float stock without float rotation.
On the other hand…
I was looking at Altimmune, Inc. (NASDAQ: ALT).
I had my eye on the high from the 4 a.m. EST squeeze. It also lined up with the Oracle resistance line at $5.79.
So I sent out my emailed trading plan with an entry at $5.80, risk at $5.50, and a goal of $6.50+.
That plan played out beautifully…
ALT chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
But the best part is that the dip and rip pattern I was looking for (it didn’t dip before ripping)…
And the key level I was watching made ALT a higher odds setup and something you can look for repeatedly.
While SERA had a nice spike in premarket and after the open, it wasn’t what I call a high-odds play because it had a high float and no float rotation in premarket when I was making my trade plans.
Of course, when you get more experienced, you can adapt and change your thesis when you see float rotation and a pattern in a stock like SERA.
But as a new trader, I want you to focus on developing a process that helps you focus on the number one high-odds setup first.
Attend one of our free training sessions to sharpen your trading skills today!
We’ll show you how to close 2023 strong and show you a trading strategy for 2024.
It’s all here — and it’s free to attend!
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade