Best setups for thin stocks

• April 25, 2006
• Jea Yu

Earnings
season is in full speed now.  The volatility has returned to the
market.  As mentioned in the last article about playing gappers and dumpers, I
want to review the best setup to play some of the thinner stocks out there. 
Thin stocks have small floats and higher prices.  These stocks also tend to have
a higher short interest which makes for some pretty strong short squeeze moves. 
The best way to avoid chop and maximize gains on the thin stocks is to wait for
the 8 and 13 minute 5 period moving averages to catch up and test.  Once they
test and bounce, they set up mini pups and pup formations.  Dual 8/13 minute
pup/mini pup setups with a 3 min consolidation breakout are the safest way to
play the short squeeze on thing stocks.

 

This morning
NTRI gapped up over 14 points.  We waited for the 8/13 min 5s to base near 66.25
and then alerts members to take the longs up to 67 at 10:41am as the 8/13 minute
formed DUAL pup and mini pup formations along with a nice steady 3 minute
consolidation breakout.  NTRI grinded through the 67.60 coil resistance on the
second attempts and ramped through 68.50 to lock the overshoots, out + 1.55

 

 

 

 One quick note, AAPL is setting
up a daily breakdown as it slips the 66.10 daily 50 and stochastics triggers a
mini inverse pup.  The 60 min moving averages are forming inverse pup
breakdowns.  The downside targets would sit at 65 initially on the 60 min chart
and 62.50 x 61.50 on the daily as it gets near daily 200.  Trail stops on a
trade like this would have to sit at 67.60.  May 67.50 puts QAAQU look good.

 

 

Good trading gang!

 

Jea Yu

 

Jea
Yu has been involved with the equities markets for over 10-years. He specializes
with intraday trading in the U.S. equities and futures markets. To receive a
free 7 day trial to Jea Yu’s Underground Trading Pit,

click here or call 888.484.8220, ext. 1.