Just last Friday, I spoke to you about confirmations…
More specifically, I explained that one of my favorite ways to know that a stock wants to go higher – is to spot it failing to go lower where it should have.
I used the below SGOC chart as a specific real-time example of how this works out:
I noted that based on the morning action with multiple fails and a gradual sell off to below VWAP, the stock looked done and to many traders was either a sell-out or a short.
Yet, it managed to pick up steam in the orange area – a place whereby all logical means it should’ve failed…
What followed was one of the most impressive low float run ups I’ve seen recently, as SGOC reached a whopping high of $18.80 later in the day.
Today, I’ll share 2 more names I’m watching for their “refusal to fail.”
- Market Cap: 65.5M
- Free Floating Shares: 5.89M
- Short Interest: 0.5%
- ATR: 1.02
There are multiple “refusals” to note here – the stock only IPOd about 2 months back and has held the $3 level very cleanly, even though it seemed like a complete flop at that point.
It then gained some steam, but each time failed to meltdown lower, holding the $4.20-$4.50 area.
It’s doing the same exact thing now and until it shows me it can’t hold the potential fail areas – I see no reason to be bearish.
Plan: I’ll consider a long trade on any protracted holds above $4.50, ideally above $5 for another leg higher, into the $8 area and further.
Forward Pharma – FWP
- Market Cap: 55.31M
- Free Floating Shares: 0.48M
- Short Interest: 1.48%
- ATR: 0.60
This is an incredibly thin name with a very low float, so beware of lacking liquidity if you do decide to trade ir.
But, nonetheless, much like others on this list, there are a few things I like – if you look closely it has had many pops and immediate fails.
YET, none of these broke down – all the fails got rejected at prior support and the stock gradually moved higher and higher.
The same exact thing just happened again, over 3 weeks ago – the stock popped and dipped, yet got quickly rebought and is now flagging near the highs.
Plan: I’ll consider a long if $7.25 holds for a final breakout move to $10 and ideally far beyond that.