Why some people will be trading it today: Dead-cat bounce investors are on this stock, which rallied Monday after a huge drop on Friday sent it from $9.30 to $2.77. Yesterday’s gap up was people pouncing on the bounce, and it paid off as the stock ran all the way up to $5.88 before settling back. Today, people are looking for more rebound.

Why I’m not trading it today: I think the stock will be below the $3 mark because the bad news isn’t just traders moving it, it’s real bad news, the potential end of a drug program deep into the approval process.

What would make me change my mind: I’d only be a player above yesterday’s high. At that point, if it goes to, say, $5.75, it’s no longer people looking people to short cover and there’s real buying pressure. Even then, this would be a day-trading play at best.

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   Jeff Williams is the lead trader of PennyPro.com. He is a short-term trader of stocks under $10 a share. At the time this article was published on RagingBull.com, he had no open positions, options or orders in XBIT, and last traded the stock on June 1.

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.

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