Unless you have taken time away from screens lately, you probably know what stock I am talking about.

It’s been the talk of the town on popular trading social media platforms, like Twitter and Stocktwits.

I’m talking about MULN.

This stock has been incredibly popular among retail traders over the past week and reminds me of CEI.

So with the volume, the increased attention and interest, and range expansion, I looked to take advantage of ‘the next’ CEI.

MULN has been on fire lately, with the stock up 312.70% on the month, according to the above chart and Finviz.

With that volatility and momentum, along with the surge in trading volume in the stock, I spotted an opportunity to capitalize on the momentum.

The Trade Opportunity

As you can see in the above chart, MULN made a higher low on Friday and took out the previous day’s high.

Intraday, the stock was holding above previous resistance, which signaled to me that buyers were still firmly in control, and it could experience further momentum to the upside.

I alerted my members in the chatroom to the idea and that I was watching the name for a move to the mid $3s:

Shortly after that, I bought the stock at $2.83, looking for a move into the mid $3s.

I never got the move I wanted in the after-hours. However, the stock closed strong in my eyes, and therefore I held it over the weekend.

With the stock gapping up over $3, I sold ⅔ of my position at $3.23.

Then, shortly after the open, I sold the remainder of my position at $3.62 and $3.46.

So, I was in from $2.83 and sold for an average of $3.31.

That’s a 17% return on a $3 stock.

That wasn’t even the best part.

The chatroom was on fire that day and has been rocking lately. 

Shoutout to my moderators, who posted their plans and critical levels and called out what they were doing and seeing in the stock.

And a special shoutout to my members. I have loved reading your positive comments lately.

Let’s keep it up!

The Bottom Line

When I notice a small-cap, low-priced stock trading massive volume relative to what it usually does and trending higher for several days, I take notice.

If I am patient enough, these movers can offer significant risk: reward opportunities.

The above trade recap was an example of just one.

There were several other solid risk: reward setups and opportunities shared in the chatroom by my moderators.

Hopefully, there’s more to come from MULN.

One thing I am sure of, though, is that small caps are BACK.

If the title of this piece wasn’t a big enough hint for you, I’m talking about drone stocks.

Yesterday was an eventful day in the markets, gang.

A flurry of news came out, which positively affected the market.

Chinese stocks traded higher after China signaled support for the shares.

Then, the FED approved the first interest rate high in more than three years.

To top it all off, President Biden announced an additional $800m in security assistance for Ukraine.

(source: Twitter)

As you can imagine, the vast amount of news and its importance had an impact on the stock market.

What I particularly LOVED was the action in the IWM.

That is, of course, because I like to focus on small-cap stocks.

What does this news and combo of events mean for us?

The IWM, which is made up of 2000 small-cap stocks, closed the day up 3.15%, according to Finviz.

Not only did the IWM close up over 3%, but it also broke above the declining 20d MA and is ever so close to bucking the downtrend.

The move yesterday in the IWM gets me excited, gang.

Why?

A reversal in the IWM could signal a reversal in small-caps and might signal an increase in small-cap opportunities and volatility.

With the potential for an uptick in small-cap opportunities, I want to go back to the announcement made by the President yesterday.

As his tweet mentioned, it will include drones.

Now it just so happens that I like a couple of small-cap drone stocks.

Together with short-term bullish IWM, and a tweet from the President, I am now paying close attention to these two stocks:

AgEagle Aerial Systems (UAVS)

UAVS, according to Yahoo, operates in the aerospace and defense industry and designs, develops, produces, and supports unmanned aerial vehicles.

Yesterday, with the drone news coming out of Washington, the stock saw volume increase and price break above the downtrend’s resistance, as you can see in the above chart.

I like the action and the setup in this stock.

I want to see the stock base over the 50d MA, which it came into yesterday. 

I also want to see the volume continue to trade above the average volume, which would signal that the buyers are still taking charge.

Draganfly (DPRO)

DPRO, per Yahoo, operates in the aerospace and defense industry and manufactures and sells commercial unmanned aerial vehicles worldwide.

Similar to UAVS, DPRO recently experienced a significant downtrend that started late last year. 

Recently the stock spent two months consolidating at the lows.

Yesterday, however, the stock might have confirmed a possible reversal after it broke above the previous two days’ high and saw volume increase over the previous day.

I will be looking for the stock to continue to hold over the 50d MA and make a higher low.

If the interest and volume are sustained in DPRO, and the stock can make a higher low, I might look for an entry on the long side.

The Bottom Line

As I have said before, gang, as a trader, all I can do is process the information that the market is giving me and react as I see fit.

Plan the trade and trade the plan

So with the catalyst and a strong short-term IWM, I am keeping these stocks and this sector on watch for a potential follow through to the upside opportunity.

COVID-19 has recently made its way back into the spotlight as daily infections have risen sharply in parts of China.

Several major cities in China have placed new restrictions on business activity to combat the spread of the Omicron variant.

So with COVID-19 back in the headlines, I’m staying familiar with several small-cap names that might provide opportunities as a result.

In trading, it pays to be prepared.

If opportunity materializes, I will act without hesitation because I am prepared for various scenarios and outcomes.

If the opportunity doesn’t materialize, gang, I’ll still be better off. That’s because I would have furthered my stock market knowledge by taking a closer look and researching several stocks.

In that sense, it’s a win-win.

Alright, gang, so with cases rising in China, here are my top three COVID-19 stocks on watch:

VBI Vaccines (VBIV)

(source: finviz.com)

Although the above chart doesn’t have one of my favorite chart patterns, it finds itself trading well below its average target price and has upcoming COVID19 data expected around the end of Q1 2022.

Year to date, VBIV has certainly not had the best start to the year. The stock is down 45.73% YTD, according to Finviz.

The average target price of the stock, set by analysts covering the name, is considerably higher than where the stock is currently trading at, though.

Currently, the stock has an average target price of $6.67, according to Finviz.

So with cases on the rise in China and VBIV expected to release data soon, I’m keeping this stock on the watch for a possible reversal.

I’ll be watching to see if the volume can increase and if the stock can reclaim the 20d MA and make a higher low.

ARCA Biopharma (ABIO)

ABIO, unlike VBIV, has one of my favorite chart patterns.

Can you guess which one?

If you spotted the higher high higher low pattern, you guessed right!

I like how the stock recently broke the downward channel and consolidated above the 20d and 50d MA.

Not only does this stock have one of my favorite patterns, but it ALSO has an upcoming catalyst.

At the end of the month, the company is expected to report data from its phase 2b clinical trial evaluating rNAPc2 as a potential treatment for patients hospitalized with COVID-19.

So I’ll be paying close attention to the price action of ABIO and looking to see whether or not this stock can continue to base above the MA’s and continue to make higher highs and lows.

Last but not least: InflaRx (IFRX)

Just like the names mentioned above, IFRX has an upcoming catalyst.

The company is expected to discuss data from its phase 2a study at Boston’s 2022 AAD meeting, held between March 25 – 29, 2022.

IFRX, like ABIO, hasn’t had the best start to the year, as the stock is down around 55% year to date, according to Finviz.

Like ABIO, the target price of IFRX is considerably higher than where the stock closed yesterday.

IFRX has a target price of $9.58, according to Finviz.

Going forward, I will be looking to see whether or not the stock can reclaim prior support at $2.50 and firm up.

If the volume increases, along with a $2.50 reclaim and price holding above the 20d MA, I might be interested in taking an even closer look at IFRX and entering a trade.

The Bottom Line

There you have it, gang.

These are the three COVID-19 related stocks I am currently watching as cases are rising in China, opening up the possibility of increased volatility in COVID-related stocks.

As I mentioned, there is no guarantee that any opportunities will arise in these stocks. 

However, there is no downside to being prepared!