Pandemic Trading Patterns You NEED to Know
Dear Penny Stock Millionaire,
No doubt, the whole world seems crazy right now. So, first I want to say that I hope everyone is staying safe and staying home. My thoughts go out to everyone affected by this virus.
I’m sheltering in place on the West Coast right now, in the time zone I dislike trading in the most … I’m just not a morning person. My Wi-Fi is also glitchy since so many more people are home and on the internet. But none of that has stopped me from trading.
And even though the overall market is down, penny stocks are HOT. They’re so hot that “U.S. News and World Report” wrote this article about my favorite niche and how my students and I trade it.
There are TONS of opportunities in the coronavirus sector right now. It can be overwhelming. So if you’re wondering where to start… read on for my top trading patterns for this (or any) market.
What to Focus on in a Crashing Market
Right now, people are losing their investments and retirement savings. It’s devastating. It’s also why I don’t stick to mainstream strategies.
So what do I do when the market is crashing?
I trade strategically. I trade like a sniper. I stick to my trading patterns and I stick to my niche. That’s how I’ve built my fortune.
I made $15,439.20 last week. Even though I’m trading in a time zone I hate and with Wi-Fi cutting in and out. How do I do it? I focus on my top trading patterns and big percent gainers. That’s the best place to start.
You also need to…
Learn How to Trade Hot Sectors
Most people underestimate how high stocks in hot sectors can go. These stocks can have legs — and they can go higher and run longer than you think.
Right now, the coronavirus is creating the hottest sector we’ve seen in years. It’s bigger than the bitcoin craze and pot stocks.
Companies releasing news about anything related to the coronavirus can spike big. That can be producing masks and protective gear, developing tests, or working on a vaccine.
You also should watch for sympathy plays in other stocks in the same sector. If one is running, others can start to run too.
Now, let me break down my favorite patterns for you and give you some recent examples…
My Favorite Trading Patterns
If you’ve been reading my articles for a while, you know I have a few favorite trading patterns…
I like buying breakouts, morning spikes based on news, dip buying morning panics, and shorting the first red day. Although these days I don’t short sell much. It’s just too risky.
Let’s start with one of my favorite patterns.
Here’s what’s great about the supernova: you don’t have to catch the bottom and top. You can catch the meat of the move and move on. That’s what I did with…
Astrotech Corporation (NASDAQ: ASTC)
ASTC is the most recent supernova. Newbie short-sellers were shorting this based on its past history of not holding its highs. They were shorting it in the $3s since it was up from about $1. Check out the chart…
ASTC chart: 1-day, 1-minute candle
Again, these hot-sector stocks can run longer — and higher — than you think. Just because a stock failed in the past doesn’t mean it will fail right away. Especially when the stock’s in a hot sector with news.
ASTC eventually failed… But not before ripping through all the shorts up to the high $7s on a giant short squeeze.
Too many newbie short-sellers just don’t know the risks of this strategy. I have enough experience to know the dangers.
A morning spike can happen based on a news release or it can be a short squeeze. Let’s look at an example…
Predictive Technology Group, Inc. (OTCPK: PRED)
I bought this morning spike on the third green day, which isn’t ideal. But PRED released news about a coronavirus test… and it’s a former runner. You gotta know former runners.
First, check out the chart:
PRED chart: 2-day, 1-minute candlede.com
I bought PRED at 85 cents, hoping it could go to $1. It didn’t. I got out at 94 cents when it looked like it was stalling out. I took my single and got out. I made a few hundred dollars on a partial position.
One indicator that a stock can run is when it’s already spiking. You don’t need to predict a stock move and you don’t need to be the first in the stock.
Dip Buying Recent Runners
You need to keep recent big percent gainers on your watchlist. They can give you more than one trading opportunity. That’s what happened with…
IMAC Holdings Inc. (NASDAQ: IMAC)
IMAC was the biggest winner on March 24. That’s when it announced it was launching a telehealth option. The new system allows patients to communicate with medical professionals without leaving home.
Here’s the chart:
IMAC chart: 2-day, 1-minute candle — courtesy of StocksToTrade.com
The stock spiked from 40 cents to $4.95, then into the $5s after hours. I didn’t trade it on the first day. It was halted almost every five minutes due to volatility. But when it was coming down the next morning, it fit my morning panic dip buy trading pattern.
The second day, it opened at $3.15 and panicked down to the $2.60s. I bought at $2.87 when it looked like it had bottomed out. It was down approximately 40% on the day.
There was so much volume traded on the first day. So I thought there could still be room for it to bounce, and it did. It was halted on the way up due to so many buyers.
After the halt, I sold at $3.40 for a profit of $2,650.
There were newbies buying the stock after the halt, thinking it would go back to the $4s and the $5s. I sold into those buyers. I feel bad for the newbies who don’t know better… But I’ll also profit when I can.
This is why you must take education seriously.
Even though I had a stellar week in trading, I still had some losses…
T2 Biosystems Inc. (NASDAQ: TTOO)
Last week, I took a loss on TTOO. Remember that trading isn’t an exact science. You will have losses. Nobody’s perfect. You have to learn from your mistakes and cope with your losses.
TTOO has a terrible long-term chart. I can see the newbie short sellers drooling over it. But you can’t underestimate stocks in a hot sector with news.
TTOO chart: 6-month, daily candle
The stock was spiking after hours on news of a coronavirus test. Some of my followers nailed buying the spike along the way from around 40–80 cents. I missed the initial runup.
By the time I saw TTOO, it was on its first pullback. I dip bought it in the $0.70s and I added in the $0.60s. My average was 71 cents. I was hoping it could run back up to its highs in the $0.80s or $0.90s.
TTOO chart: 2-day, 1-minute candle
While I was in this trade, my Wi-Fi and quotes were cutting out. The stock kept going down so I cut my losses. It did eventually get back to the $0.80s, so I was on the right track.
I’m OK with this trade, and it teaches valuable lessons. You have to remember everything that can affect your trading — like Wi-Fi issues, FOMO, and exhaustion.
One more pattern you should be looking for are multi-day breakouts. A multi-day breakout is a trading pattern where a stock tops out around the same level for multiple days on the daily chart. Then one day, on higher-than-normal volume, the stock breaks out over the resistance level. The new price level on the stock brings in new buyers.
It also forces shorts to buy to cover their positions as the stock makes new highs.
Breakouts can be powerful moves on high volume and with a news catalyst. They can also be on a new all-time or 52-week high. New price levels bring more traders to a stock.
The Bottom Line
The coronavirus plays are in a hot sector. It’s the same as the crypto, bitcoin, and weed that ran in the past. As soon as a company mentions the sector, the stocks move. It’s amazing.
I’m putting my top trading patterns to good use. But it’s not just this crazy market, these have been my go-to patterns for years. They’re not always the same — that’s why you have to study. It’s not about memorizing the patterns, it’s about understanding them. Then you can adapt to any market.
This is my best trading month in years. But I’m getting a little burned out. Keeping up with the fast-moving market can be exhausting. Make sure you get enough rest and don’t overtrade.
We don’t know how bad this pandemic will get. We don’t know how many people will be affected. I’m not a doctor or an expert on viruses, but I do understand exponential growth.
I hope you stay safe through the coronavirus pandemic and in trading.
Editor, Penny Stock Millionaires