Trade Review SGOC "HOW TO TRADE LOW FLOAT MOMO" | Bulls on Wall Street

Trade Review SGOC "HOW TO TRADE LOW FLOAT MOMO"

 

Here is a trade review on SGOC. We bought this stock in the 2.4s and 2.5s in anticpation of a breakout on the daily chart at 2.7.   What we noticed last week was that low float stocks were in vogue and seemed to the only stocks that are moving.  This particular setup is a continuation play on the prevous days breakout where we anticpate a 2ndary breakout.

I bought this in the 2.43 spot right in the morning  as the early morning weakness in the stock was bought.

 

In momo stocks often what happens is if the stock does not gap up after a huge runup the previous day you will see very quick and heavy profit taking into the open.  Also aggressive short sellers will pile in thinking the previous days run was a pump job.  As the stock starts to dip though it gets supported as buyers emerge as the stock is now at a discount.  Often the traders who missed the previous days move will jump in hoping the stock can rebound and go on another run.  Most traders never really care about losses but they hate that feeling of getting left out.  Missing a big run so if they get a chance after missing such a run when they see weakness they will come and support the stock.  Once the stock stabilizes and it becomes obvious that the stock is not going to fade the momo/daytraders like me will rush into the stock and push it to new highs.

 

We added this stock at 2.43 and 2.51

Sold 1/2 at 2.94

sold 1/4 at 3.50

Then added back a full positon at 3.3 and sold that postion along with the 1/4 position held previously in the 3.6s

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https://bullsonwallstreet.com/2012/01/daytrading-with-less-then-25k/

 

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13 thoughts on “Trade Review SGOC "HOW TO TRADE LOW FLOAT MOMO"”

  1. Hi Kunal,

    This is a great example, and I was watching this one but didn’t buy into it.
    I wanted to ask if you could explain why the stock didn’t get the discount buyers the morning after the first runup, there the stock crashed, yet it did get buyers after the second runup. Both times the stock gapped down the following morning by about the same amount, yet we got a totally different result!

    Thanks, AndyK

  2. It was the nature of the pullbac and the setup on the daily. the 2nd time it was setting up a n actual breakout from the first time. where the first time it was just a big spike and then nothing and also i believe it gapped down the next day which makes things more tricky.. a quick pullback is much easier when it opens fflat then just dips real quick

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