This week the market came back swinging sending S&P 500 all the way back to the all time high reached in May 2014. The unusual side of things is that the jobs number for May came out last week and it was significantly below the projection. Normally this would be bad but in this backwards market fueled by artificially low interest rates, it sent the market back to the highs. This is because market participants thought that the federal reserve would be less likely to raise interest rates at their June meeting which means the market has more room to run. After 6 up days in a row the market finally pulled back Friday following a sharp sell off in Europe and the emerging markets which got slammed over 2% on Friday.
The move higher in the market really doesn’t make much sense (I think we are headed for a recession in the next year), but the fact is as a trader, I don’t care where the market is headed. All I care is that it goes some place so I can jump in and out and extract consistent profits. When it doesn’t move anywhere then we have a problem, but the great part about the market is that their is always an opportunity at any given time. Even in the summer months when the volatility is usually lower, you still can get many trades in the morning. The key to zeroing in on these opportunities is to get an end of day or real time scanner which will allow to find every stock that is moving at any give time. By filtering out all the low volatility stocks that have no means of providing you a profitable trade, you increase your chance of success significantly. By avoiding the low volatility times of the day you also increase your odds of success by reducing the chance you get stopped out on a trade.
This is how I found the penny stock Helios and Matheson Analytics Inc (HMNY) this week. Man oh man this was an awesome stock to trade. It’s not every day that you see a penny stock go from $1.00 to $17.00 but that’s what happened with this low float huge gainer! I won’t say this is a rare occurrence because I have seen it happen numerous times in my 14 year trading career but you don’t always get multiple opportunities like I did with HMNY. I was able to extract ten’s of thousands by simply finding the stock early and jumping in and out. By not being greedy I literally was about to win dozens of times on this stock in the past 3 days. I was even able to pinpoint the top by simply looking at my trading system and finding the optimal time to get rid of my long position. This isn’t rocket science. Anybody can do once they know how to find these stocks, when to enter, where to places stops and when to take profits. Having a plan is the most essential part of trading successful and a lack of a plan is why so many people end up big fat losers in penny stocks.
An interesting theme right now is that a lot of these low priced junk penny stocks are making 50 – 1500% moves in minutes or hours. Normally at the end of a big bull market as we have had for the last 7 years here in the US, the small and micro cap stocks are the last stocks to really move. This is because all of the mid and large cap stocks have already made there moves and are fairly valued or over valued, and the lower priced stocks which have no intrinsic value, are all that is left. It doesn’t really matter whether the companies have earnings or not because traders only care that the company has a catalyst. This could be one of many things which I explain in detail here. If you want to see exactly how I find stocks like HMNY and craft a plan to extract thousands of dollars, you should consider checking it out.
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