Two Setups to Keep An Eye On

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MDB is consolidating near all-time highs. A break above 85 might trigger a bigger upside move. 80 is a decent stop level for a short-term trade. Keep in mind that most breakouts have failed in the past couple of months, so you should not overstay your welcome. Be nimble and take partial profits quickly. I’d sell half at 90 which represents 1x risk, a quarter at 95 which would be a return of 2x risk and let the rest ride until it closes below its 10-day EMA.

It’s always good to have several scenarios for a stock, especially in this market environment where the wind changes on a daily basis. If MDB clears 85 but it fails quickly and closes below 85, it can probably be shorted for a move to 75 (especially if the major stock indexes are breaking down as well).

The problem with MDB is that they report earnings on December 4th, so none of the above mentioned scenarios will have enough time to play out.

SHOP has been a wild horse in the past couple of months. Trending stocks tend to acknowledge their 50 or 10-day moving averages (stay above them while in an uptrend and below them while in a downtrend). This hasn’t been the case with SHOP, which has been languishing between 120 and 150 for quick some time.

A break of 151.60 can potentially push SHOP to 165 in a short-term perspective. If that breakout fails and SHOP goes below 143, it can be shorted until 125.

Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.

The Most Shorted Stocks Currently In The Market – April 11

The stocks below have a very high short interest – over 20% of their float is short. They are close to their 52-week highs and have built a small base, which might turn into a launching pad for higher prices. Short sellers always sound smart, but they are often early and become victims to a short-squeeze – a process that rapidly rising prices that forces short-sellers to cover their bets, which adds more fuel to the upside momentum.

The Most Shorted Stocks Currently In the Market Might Be Ready To Break Out

59 stocks priced above $5 currently have over 30% of their float short. Four of them are setting up for a potential breakout.

A breakout in highly shorted names often leads to a squeeze as short sellers are forced to cover their positions. It is not unusual to see a 20-30%, even 50% one-week move in a highly shorted name, especially when its float is relatively small (under 25 million shares).

Here’s a weekly and a daily perspective of the four stocks.

Fast moves

audiI am starting a new sequel of posts that will look at stocks that gained/lost more than 20% in a week. Was there something common among them, just before they started their move.

As of today’s close there are 61 stocks that gained more than 20% during the last 5 trading day. 37 of them were up more than 100% before they started their 20%+ move. It is true that we are experiencing an abnormal year, during which SPY is up 61% from its March’s lows, but the relative strength is a phenomenon that for the most part has always worked (stocks that outperformed during the last 6 months/1 year tend to outperform during the next 6 month/1year).

As of today’s close there are 3530 stocks that are priced above $1 and trade more than 100k share per day. 537 of them (or 15.2%) more than doubled during the last 6 months. As I mentioned already, out of the 61 stocks up 20%+ during the last week, 37 ( or 60.6%) have been already doubled before their last week’s move. One day is not statistically representative to declare that I have found a way to improve the odds of finding a fast moving stock. I have been following “the 20%+ in a week list” for a while and I can tell you that the stocks that had a 6 months gain of more than 100%+ before the fast  move, were consistently north of 50% of the list.

In other posts I will point out other common characteristics among the fast movers.

Some trading ideas from my momentum screen for the next several days:

RVI NTWK JAZZ ROIAK GTN IGOI CBI AHCI PCX