I've talked a lot about premarket trading lately — the setups to look for, the criteria for a buy in pre, sell in pre trade, and when to be aggressive.
But I haven't talked a lot about trading after hours.
And since Cingulate Inc. (NASDAQ: CING) and Nova LifeStyle, Inc. (NASDAQ: NVFY) just made big moves after hours — I want you to be prepared.
After hours is different from trading in the premarket.
So here are some things to be aware of and the criteria to look for in after-hours runners.
Trading Times
Premarket starts at 4 a.m. up until the official market opening at 9:30 a.m.
Regular trading hours are from 9:30 a.m. to 4 p.m. And after hours run from 4 p.m. to 8 p.m. Eastern.
The only stocks that you can trade after hours are NYSE and Nasdaq-listed stocks.
If you're into OTC stocks (which are dead anyway), after-hours doesn't apply to you.
Like premarket, there are no trading halts after hours, so stocks can have wild volatility.
But unlike premarket, after-hours can have lower volume. In premarket traders are eager to take positions in stocks with news. But after hours, most traders have made their trades and left for the day.
So be aware of those two dangers.
But if you still want to try your hand at trading after hours, look for stocks that have the same criteria and chart patterns that CING and NVFY had…
The Winning Setup
The three criteria I like to look for in after-hours runners are:
- Low Float
- Insane Volume
- Short Seller Panic Points
CING has a float of around 850,000 shares. I call that a micro float. And it traded over 57 million shares in volume last Wednesday when it went wild after hours.
NVFY has a float of only around 1 million shares. Last Thursday it traded a volume of over 47 million shares — that's insane volume relative to the float.
So they both hit the first two criteria.
Now let's break down the chart patterns and panic points…
What you're looking for in these heavily shorted low-float stocks are those panic points where you know shorts are gonna lose it because they have the unlimited potential for losses.
If you look at these two charts, you can see that they're both heavily shorted…
The stocks spiked briefly at the open. Then short sellers piled in and the stocks pulled back and consolidated below VWAP until the market close…
That's when they started to curl back up as shorts wanted to exit…
And the panic points for shorts in both CING and NVFY were when the stocks broke the high of the day.
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