The set-up: Momentum traders bailed out of Castle Brands after it reached its near-term high of $2.22 on June 6, driving it all the way down to $1.48 before Wednesday’s earnings beat. The good news resulted in an immediate bounce-back, but there’s room for more.

My back story in ROX: I got interested in ROX after Castle Brands announced a deal with WalMart to put its Goslings brand ginger beer into more than 4,500 Wal-Mart stores. Who doesn’t love a great Moscow mule, right?

I first bought ROX on March 12, and have realized $40,000 in gains in it this year. I still hold 20,000 shares. While I’m mostly a short-term swing trader, I love a good long-term play when the technicals line up with a good story, a good balance sheet, a good fundamental reason for going higher and news; it’s how I make more than my typical 5 or 10 percent, so while a lot of swing traders might cash out now, I think there’s room to run.

The stock’s back story: One-third of the stock is owned by billionaire Phillip Frost, and Bloomberg reported in late April that the company is considering a sale in the face of takeover threats. Either way that plays out, it’s good for me.

My next move: I’m standing pat, and might buy more if it falls back to $1.74. My expectation, however, is that ROX breaks above its trend line high of $2.22. If that happens, I expect it to break through $2.30 to about $2.50 before it consolidates. It will take a few weeks, maybe a month; I’m willing to wait.

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   Jason Bond runs JasonBondTraining.com and is a swing trader of small-cap stocks. At the time this was published on RagingBull.com, as described in the article, he held the stock (20,000 shares), was hoping to reach a near-term goal ($2.50) and had a point where he’d buy additional shares ($1.74). He had no additional options or orders in ROX.

Author: Jason Bond

Jason taught himself to trade while working as a full-time gym teacher; his trading profits grew eventually allowed him to free himself of over $250,000 in student loans!

Now a multimillionaire and a highly skilled trader and trading coach, Over 30,000 people credit Jason with teaching them how to trade and find profitable trades. Jason specializes in both swing trades and in selling options using spread trades, which balance the risk of selling options. Jason is Co-Founder of RagingBull.com and the RagingBull.com Foundation which donates trading profits to charity. So far the foundation donated over $600,000 to charity.

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