Two nights ago I talked about Kodak on the nightly video watchlist I sent to my Profit Prism members…
Being that this is not a company that has been on anyone’s radar lately, but just jumped 2000% to highs today… I am going to show you why it hit my watchlist at $2.62.
But first, what happened yesterday?
As part of the Defense Production Act (DPA), the U.S. International Development Finance Corporation (DFC) is looking to provide a $765 million loan to Kodak.
The funds will be used to launch Kodak Pharmaceuticals and produce ingredients for generic drugs including hydroxychloroquine that some have said can treat the new coronavirus.
Tuesday, KODK had a wild one to say the least, closing up 203%.
And today even things got even crazier as it hit a high around 2,000% above my watchlist price.
Many times stocks will show signs of news on the horizon… before it actually breaks.
So let me show you exactly why Kodak was on my watchlist Monday night… before the news broke.
Here’s what the chart looked like when I sent out in my nightly video watchlist on Monday.
Just notice the huge spike in volume on Monday… along with the strong rise in price.
There was a clear increase in demand for the stock… and that’s what I look for in my daily scans.
With KODK closing near highs at the 200 day sma, I put it on the watchlist and sent it to my members alerting them to the potential in this stock going into Tuesday trading.
At its core, trading is about supply and demand.
Which is what my Profit Prism strategy uses to find stocks that have the potential to pop…
When I found KODK and added it to my watchlist.. It was all based on the demand…
There was no news yet someone clearly knew something about it.
My scanners alerted me early giving us a head start in preparedness…
And it paid off for many of my members.**
But this wasn’t the first time a surprising industry shifting announcement put the KODK stock up big.
Back in January 2018 Kodak was talking up Crypto… what came of that?
KODAKOne was a new venture to track photo usage online using blockchain technology, and you can see the stock ripped up from under $3 to over $13 in 2 days…
It turns out it was just a brand licensing deal and in the end didn’t play out so well after the initial pop… reverting back to a near bankrupt company.
Sure… There are actually a couple reasons things could be different this time around…
For one they didn’t receive a $765 million loan from the federal government for their crypto deal…
And second, they actually are going to be developing a real product so it’s more of a retool than a dream..
Being they will now be manufacturing ingredients for generic drugs deemed in short supply by the federal government, there is a real product with a real demand.
And with Kodak’s long history of manufacturing chemicals used in photographic film, they actually have some background in this type of production…
I don’t know for sure, but this story has some real legs to it as opposed to the branding deal around KODAKOne… (except it may have run too far)
So let’s go to the chart…
The day after my watchlist was sent out… KODK closed up 203%… that was just yesterday.
Today the stock made a trip to the moon…
We had a good opportunity to get in yesterday with a close at around $8…
But now it’s hard to find a good reason to be long at these insane prices…
Kodak had a market cap of a little over $100 million just 2 days ago and at the highs today, the market cap was over $2 billion.
All based on a $765 million dollar loan.
Keep in mind this is a loan not a grant.. So now it’s up to KODAK to create real value.
Maybe it’s a $2 billion company, but for me… I prefer to see some production before putting a value that high on a company..
It could make my watchlist again, but right now it’s out of bounds…
Regardless, as noted earlier, many of my members were able to use what I have been teaching with my Profit Prism strategy and make money from my watchlist pick in KODK…**
The KODK money has been made, but to find out what’s on my watchlist tomorrow… Join Profit Prism Today
*Results presented are not typical and may vary from person to person. Please see our Testimonials Disclaimer here: https://ragingbull.com/disclaimer.
**Raging Bull does NOT track or verify subscribers’ individual trading results and these individual experiences should NOT be understood as typical as or representative. Please see our Testimonials Disclaimer here: https://ragingbull.com/disclaimer.
Do you know what’s next for the market?
With tech stocks becoming a little shaky from profit taking, it could be time to protect yourself from wild market swings… just in case.
When the market gets more volatile, swinging back and forth, trading losses can accumulate quickly if you are not careful.
If your trading system is too rigid and not flexible enough… you better have a good idea of what the market is doing next…
If you don’t, it’s important to find ways to protect yourself from uncertainty.
And I’m going to show you exactly how I do that, as well as, tips you can use to limit your exposure to market volatility.
When you aren’t sure what’s next for the markets, one thing you can do is simply limit your exposure to the uncertainty.
How do you limit exposure?
It’s quite simple actually… by not being in the market for long periods…
When you are looking to grab big moves, you are left exposed to the wild unpredictable swings.
It’s great when the market is rolling straight up, but not so great when things get wild.
When the market gets more volatile, you very likely start seeing stops get hit, just to watch the stock turn back around again.
It’s important to recognize the overall market conditions and know if your system can operate profitably within it.
If not can your system be tweaked/ adjusted?
Here’s how I handle trading when things start to get a little “swingy”
I simply find stocks that are ready to pop and then I get in and out on the pop… This way I’m not exposed to the longer time frames in the market…
Look at the chart for SBFM.
Just last week I was watching this stock as it broke above resistance from the earlier moves higher.
The stock was holding support at the 20 SMA… and when it finally broke out, volume spiked up significantly…
Seeing the strength and increased demand for the stock as it broke out, I jumped in at .0234 and added some more at .0285 as the stock continued to show me strength going into the close.
And what happened next?
As you can see, SBFM popped up the next morning and I was able to grab my profits quickly.
Well before the move down the day after that.
I took advantage of a quick move for profits, while effectively limiting my exposure to the longer term back and forth swings that ultimately might take a trader out before making the next move up.
I’ve been able to limit my exposure to the uncertainty and wild swings in the market by trading in and out for quick profits…
Penny stocks move the beat of their own drum…
I am grabbing quick profits and moving on to the next trade… over and over.
I never worried about what’s going to happen next in the overall market because my system is primed for any market…
Learn how to take advantage of stocks ready to POP overnight with my Free Stock Trading Starter Pack
Let’s talk about trading the gap.
What’s a gap?
It’s basically an area on the chart where no shares were traded.
For example, on June 22, the low for SNSS was $0.535 and the next day the stock opened at about $0.354…
Leaving an empty space (gap) on the chart from .535 to .354.
Why does this happen?
Generally caused by some sort of major news coming out while the market is closed.
This could be earnings that miss or beat expectations, new product announcement, lawsuit, fraud, etc…
Or in the case of SNSS… deciding not to advance into phase 2 on one of their pharmaceutical studies… thus disappointing investors, ultimately creating the gap down to $0.354.
The good news is that gaps happen every day…
And I’m going to show you exactly how I trade the gap-fill with a real-money example I just took in SNSS…
Now you know what a gap is…
Let’s talk about the gap-fill.
With a gap, there is little information on support or resistance inside the gap, as there was no trading volume that took place.
So there are no levels for traders to look to for insights into supply and demand.
For that reason, stocks that enter a gap often have a tendency to trade through it… or fill the gap.
There are no guarantees though. The stock gapped down for a reason, so it’s not a blind buy and hold.
You have to use a strategy that will put the odds in your favor and always have a plan.
Since I am all about hitting base hits day after day, it’s the best way I’ve found to grow a small account, I am not trying to get the full gap-fill in my plays.
If a stock really takes off, it’s possible.
But for me I will shoot for a reasonable price level within the gap to up my odds of getting paid.
Let’s take a look.
Here’s a trade I just entered yesterday based on my strategy for playing a gap fill.
After a big gap down, SNSS bottomed out and consolidated in a range from .25 – .35.
There are a couple things I was watching for.
First off, SNSS needs to trade into the gap… afterall, it can’t fill the gap if it’s not even breaking into it yet.
I need more than just that though…
I want to see a pick up in volume showing me that demand for the stock is increasing as it breaks into the gap.
Something needs to propel the stock up. Without increasing volume, there likely won’t be enough buyers to push the stock further into the gap.
And as you can see with SNSS, as the stock broke into the gap yesterday… volume was also increasing, along with a 3rd sign of strength… closing near the high of the day.
This tells me people want to be in the stock… instead of selling, they were still buying into the close ready to hold it overnight.
Needless to say, I took a trade in SNSS yesterday.
Jumping in at .35 and of course alerting my members to my trade as well…
And looking at the stock today, you can see it moved up to my first target in the .40s quite easily hitting a high at .4188.
Could SNSS fill the whole gap to .50?
It certainly can.
When I have quick double digits returns overnight, I will take them to the bank and get ready for my next trade.
The likelihood of SNSS shooting through the gap wasn’t near as high as the chance of it hitting somewhere in the .40s.
Small gains add up fast.
And if SNSS sets up again, I will be quick to jump back in… but in this case it wasn’t moving as fast as I would have liked to hold longer.
My members are taught to trade it according to their own plan…
So while some may grab profits quick like I do, others may choose to hold a little longer.
That’s up to each individual trader and what their plan and risk tolerance etc..
Trading isn’t rocket science… it just takes some time to learn the setups that will give you the highest probability of success.
And of course creating a plan and sticking to it.
To learn the setups I use, including the gap fill… Grab Access to my Free Stock Trading Starter Pack