by Stevie Swai
As you know, Trader Scott and I love trading small stocks. Small stocks offer incredible volatility especially when they’re moving on news. The opportunities to buy reactions and sell into rallies are plentiful, through keen observation plus having the patience to wait for good set ups. But, the key word here is ‘trading’ not ‘holding’, and certainly not ‘investing’. If you are a subscriber, you’ve been able to follow along with us these past couple of months as we’ve navigated our way through many winners, accumulating impressive profits thus continuing to build our accounts.
One of the sectors we have especially had fun with has been the shipping industry. The jokes Scott and I have shared over the past couple of months seem to get sillier and sillier, as we’ve watched DRYS, DCIX, and TOPS sink into the same depths in which they sail.
These companies are not going straight to the moon, at least not anytime soon, but a lot of cash can be pulled out of these stinkin’ sinkin’ tankers through daytrading, and we’ve been doing it recently as more volatility has returned. Taking a close look at those long term bearish charts, we can see they’re at the very bottom of the ocean. But taking a look at the short term charts of DRYS and DCIX shows something different. The long term downtrends have been punctuated by some quick bounces. Recently each day has offered at least one opportunity for a really, really, good trade. And Scott just did a video about the recent setups in DRYS.
So this morning, I was stuck in a trade that wasn’t going anywhere. More than a little bored, I decided to dump my shares and head over to the shippers for a quick flip, confident there could be some trading opportunities to do small in and out trades. I bought 1100 shares of DRYS @ $1.28, and sold them into the midmorning rally @ $1.42 for a quick .14/share profit. The stock did reach a high of $1.50, so I did leave some money on the table, but I was safely in and out of this highly unpredictable heartbreaker. And who cares anyway as there was another good entry at 12:11pm @ 1.33 and an exit @1.43.
So the point of this article is that even in the most bearish and ugly charts, there are little nuggets of gold offered to those who can recognize good entry points. But, do not hold onto these stocks, just trade them, or you may find yourselves going down with the ship.