Dear — Jeff Bishop here,
Yesterday was a day full of learning for traders who take advice from Reddit forums.
What we saw was a culmination of mania across a variety of hot stocks and industries.
That included EVs— WKHS, NKLA, NIO, XPEV, and LI were all down— with TSLA standing out as the only notable exception.
Palantir (PLTR) found a top, at least for now it seems.
Moderna (MRNA) also tanked, as it seems like people are trading vaccine stocks a lot like bitcoin these days.
In today's issue of All-Access, we share an example of how traders could have taken advantage of the breakdown in one of these parabolic stocks, as well as strategies for getting in on them before the runup.
Yesterday's chart of the day is MRNA.
This stock has been on watch for many in the past few trading days since the chart went parabolic: the price went from $100 to $178.5 in just four trading sessions.
Let's see how you could have taken advantage of it.
Moderna is a clinical stage biotechnology company. Most recently, it has gained mainstream attention after announcing 94.1% effectiveness of its vaccine for Covid-19 case prevention.
On Wednesday last week, MRNA opened at $99.03 and broke above its 52-week high. Two sessions later it closed up at $152.74.
Yesterday in the premarket, the stock was trading as high as $178.57, up 16.9% from the previous day close and more than 78% since the move had started.
On yesterday's close, the stock was trading at 141.01 or down 7.68% on the day.
Undoubtedly, this was one of the most epic short opportunities of the year.
You see, when a stock goes parabolic for 3+ days, there's a high probability that it breaks soon and gives back at least a good chunk of its gains.
Here is brief chart analysis:
This kind of action highlights the importance of learning to trade on the short side. As they say, its stairs up and elevator down. Try to learn how to exploit such reversals.
As always, familiarize yourself with the clues on the chart. It might be helpful for you next time a trade like this comes around.
If you want to learn how to trade biotech the smart way— and avoid chasing so you don't get caught on the wrong side of the trade— we urge you to join Kyle Dennis' upcoming catalyst trading workshop here.
|
Contrary to the popular belief, what goes up doesn't really have to go down… but still, oftentimes it does.
If air keeps coming in, a bubble will have to burst.
Obviously, whether we are in a bubble is an ongoing argument, and we aren't taking either side of it.
But, there's no denying that a lot of stocks and even whole industries— EVs and Vaccine-names as the most obvious examples— have gotten extended.
However strong and sound the case for the underlying business may be, it's hard to justify a move of nearly 80% in a matter of 3 days.
Especially for a name that was up 5-fold to begin with.
As we described above, applying that logic to the price action logic would've made for a great trade opportunity in MRNA yesterday.
But worry not if you missed it— in this market there's always more.
In fact, just last week we told you that the parabolic culmination— like the one we saw in MRNA— might be happening or is about to happen in a number of names out there.
Our picks— BLNK and NIO— are both down 20-30% since our calls.
And we see many more coming. Today's All Access watchlist is stocks that stand to deflate the most and key levels we're watching:
Novavax (NVAX):
Moderna (MRNA):
Palantir (PLTR):
QuantumScape (QS):
|
We mentioned in Strategy Corner how MRNA went parabolic and how we could have traded its subsequent selloff.
But it's also important to use moves like MRNA's as examples of how we can ride the way up.
No doubt, Moderna was at the front on center of the headlines, as a result of its vaccine efficacy, but there were other stocks that caught the tailwinds of its moves.
We call this a sympathy play— and as traders, it's something we want to keep an eye out for.
One of those stocks was GW Pharmaceuticals (GWPH). And if you scan the headlines, you won't find any obvious catalysts behind it.
The stock moved from $89 to $140 in a climb that spanned the entire month of November, and the rally began and abruptly ended in lockstep with MRNA.
Jeff Bishop actually spotted potential in GWPH midway through its November move.
Shares had been in consolidation mode, but the stock looked like all it needed was a little shove to get going again...
If you were in the trade before the 18th, the lesson here was to be patient and rather than stopping out of the trade too soon.
Consolidations aren't always a perfectly straight and narrow line, as a stock prepares for its next leg higher.
As we can see from what happened next, there was no reason to jump too quickly to conclusions...
However, the slight pullback on the 18th did provide a perfect entry place for traders who missed out on the action during the initial days of the month.
Jeff Bishop took advantage of the entry. He took some off along the way at 100% and then let the rest ride for 1,000% gains.
Download a copy of Jeff Bishop's Traders Blackbook to learn how everyday traders are applying his veteran approach to the market.
|
The Most Overlooked Catalyst In The Game? By Kyle Dennis of Biotech Breakouts
Small-Cap Watchlist — 4 Stocks That Can Retest Highs By Jason Bond of Jason Bond Picks
Santa Claus? Stats Say He's Real By Jeff Bishop of Total Alpha
The Death Of Electric Vehicles? By Nate Bear of Weekly Money Multiplier
|
Tidak ada komentar:
Posting Komentar