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I start each day prepared and armed with a detailed watchlist and an overall idea of what type of environment and market we are in.

After a significant selloff from the highs, the IBB found support in the $155 area and bounced near the short-term consolidation resistance, leading to some exciting setups in individual biotech stocks.

The IWM, which is composed of small-cap US stocks, has remained firm this week and yesterday showed possible signs of a breakout forming as the ETF traded near resistance and closed up 0.26% on the day. Strength in the IWM might bode well for small capitalization and penny stocks.

With support found and established in the biotech space and signs of the recent strength in small caps, I have identified promising setups in two biotech stocks.

Endo International (ENDP)

ENDP, according to MarketWatch, focuses on developing, manufacturing, and distributing branded and generic pharmaceutical products. The firm operates through the following segments: Branded Pharmaceuticals, Sterile Injectables, Generic Pharmaceuticals, and International Pharmaceuticals. 

Market Cap: 1.05B

Float: 229.90M

Short Interest: 9.07%

Average Volume: 11.11M

ATR: 0.27

I talked about this stock to my members just over a week ago. ENDP is up 9.66% on the week and 50.83% on the month. 

The stock has an average target price of $6.57 by analysts covering the name, which is considerably higher than where the stock closed yesterday.

Before the breakout yesterday, the stock spent a considerable amount of time consolidating in a tight range.

From now on, I am looking for history to repeat itself. By this, I am referring to how the stock has consistently traded since September. On multiple occasions, the stock has run up for two days, consolidated, and then run up for two days again.

This action might present me with an opportunity for a short-term trade. If the stock is looking strong again today, I might be looking to enter on a pullback, with $4.80 to $5 as my profit zone.

Eargo (EAR)

EAR, according to Yahoo, is a medical device company that develops and sells hearing aids to assist people with hearing loss in the United States. It sells its products through online stores. The company was formerly known as Aria Innovations, Inc. and changed its name to Eargo, Inc. in November 2014. 

Market Cap: 405.85M

Float: 33.91M

Short Interest: 5.09%

Average Volume: 2.15M

ATR: 1.16

EAR impressed me yesterday! The stock closed up 34.87% and traded over 12M shares. This stock, from a technical standpoint, has a lot of potential, in my opinion.

By potential, I mean that the possibility for a gap fill exists and that fill, which is around the $20 mark, is roughly 100% away from yesterday’s close. 

Now, by no means am I saying that the stock will fill the gap. However, the potential for that to happen excites me, so I am taking a closer look at this stock.

I am also keeping an eye on the 50d MA, which of course, is also an aggressive target. I am not expecting the stock to soar to the 50d MA or the gap-fill immediately. In the near term, however, if the stock continues to hold up and trade higher, both of these areas could be target zones.

Author: Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

In terms of individual stocks, one has grabbed the headlines over the last two days, and rightfully so!

This stock has Made SPACs Great Again. Heck, it’s made small caps great again too!

By now, you should know what I am talking about.

DWAC, of course.

Digital World Acquisition (DWAC) was up 356.83% on Thursday. Yes, you read that correctly.

The move came after it was announced that DWAC, a special purpose acquisition company (SPAC), announced a deal to merge with Trump Media and Technology Group.

Should the deal go through, the Trump Media company said it plans to launch a new social network.

As a result of this press release, the stock soared 356.83% on day one and traded close to 500M shares.

The range, small float, the news and headline, volume, and volatility created exceptional opportunities, and of course, I was waiting for the right moment to pounce.

But before I recap my trade, let’s take a look at the technicals of the stock.

Market Cap: 1.31B

Shares Outstanding: 28.75M

The action yesterday in the stock was immense. From the morning till the close of the after-hours session at 8 pm, the opportunity in the stock was endless.

The above chart shows how the stock cleanly held above the trendline and offered four consolidation breakout patterns, all of which had fantastic follow-through and momentum.

Going into day two, I had the following levels of support and resistance from day one. $65 support, which at the time acted as the support of the uptrend. $50 support, which was resistance in the afternoon on day 1. My targets and potential areas of resistance were $80 – $100.

The Trade

I bought the stock yesterday afternoon at $43.28, as the stock closed strong and above support. Volume in the stock was immense, and for the entire day, the stock continued to make higher lows and highs, firmly holding the uptrend.

My plan from the get-go was to hold my position as long as the uptrend remained intact, looking for $80 – $100 in the after-hours session or pre-market the following day, as the action from day one led me to believe that the stock had trapped shorts and would gap higher.

To put it simply, I was right.

I sold ⅓ of my long the following day in the pre-market at $77.25. That sell represented a 78% gain.

I sold another ⅓ of my long shortly after the first sell, at $84. That sell represented a 94% gain.

I sold half of what remained at $100, representing a 131% gain.

Finally, I sold the last part of what remained at $128 for a 195% gain of the open.

That all adds up to an average of a 124.5% gain!

Not bad, if I can say so myself.

The Bottom Line

Not only has this stock presented immense opportunities it has also sparked many sympathy plays and has the potential to create a wild trading environment for small caps into year-end. Hopefully, this is just the beginning of what is to come into year-end.

Author: Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

Last Friday, Bitcoin was having an excellent day after it broke above $57,500 and reached $63,000.

On Friday, highlighted in yellow, bitcoin pushed higher and came back into significant resistance near the all-time high of $64,899.

Why does this matter?

On Friday, I sent out a watchlist to my members, mentioning bitcoin-related stocks that might benefit from the strength seen in bitcoin.

Fast forward a few days, and I think it’s safe to say I hit the nail on the head with that watchlist.

The two bitcoin stocks from the Friday watchlist:

  • CBTC is up 44.57% from Friday’s open.
  • DIGAF is up 25.80% from Friday’s open.

You might be wondering how I put the watchlist together. After noticing strength in the bitcoin space, I looked at many bitcoin-related stocks and created a shortlist of those I believed showed the most promise and had the best risk: reward set up.

The strength in bitcoin presented two opportunities and trades for me. Both were great setups and provided substantial risk: reward.

Let’s go over the trade I had in XTRA Bitcoin (CBTC).

CBTC, per otcmarkets.com, is a Bitcoin mining company supporting the Bitcoin blockchain in North America. The company is focused on expanding its operations by increasing its Bitcoin mining hash rate and infrastructure capacity.

Market Cap: 24.5M

Float: 1.9B

CBTC was on my radar because it had a flag pattern and set up a potential move higher. It had resistance near the $0.012 area and support at $0.008.

The Trade

On Friday, I entered the trade at $0.0108 on a pullback, and my stop loss was placed near the 200d MA, $0.009. I was targeting a move to $0.012 – $0.013.

Not only was there strength in bitcoin and the overall sector, and a bullish setup in CBTC, which presented a favorable risk: reward opportunity, but the volume had also increased sharply from the previous day.

As the stock neared a critical area of resistance, the increase in volume added to my confidence in the stock’s ability to break out and reach my target levels.

Yesterday, the stock broke above the flag and resistance at $0.012. The volume increase from the previous day was sustained, as volume continued to rise as the stock broke above resistance. Notably, the stock was able to hold over the resistance in the morning, which told me that It was likely to reach my target area of $0.013.

I sold ⅔ of my position at $0.013, which represented a gain of 20%.

I sold the last portion of CBTC at $0.0141, which represented a gain of 29.6%.

The Bottom Line

I am always prepared and do my best to identify favorable risk: reward opportunities. CBTC presented me with a fantastic opportunity for a trade and the opportunity to alert my members of the setup and strength seen in the bitcoin sector.

Author: Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.