Strategy Description: Low float stocks can have enormous gains when they end up going parabolic. However, the general trading strategy differs from when it is churning and grinding around, to when it begins to get extended.
Prior to enormous volume and a nice technical breakout a trader will be rewarded for buying weakness and selling strength (within reason of course). Then as the pos begins to hold and grind further and further shorts that chase weakness will get punished, and eventually create the breakout on high volume. When this change of character occurs it becomes all about buying strength, and holding into enormous parabolics. It can have multiple big 2 minute candles in row, as the charts will demonstrate.
Technical Analysis:
GENE was a low float stock which originally had some decent hype and float rotation but faded off decently. It then rallied back up a little to restest the approximate high. After falling back again, it was noticeable that day after day slight dips before vwap were aggressively bought up, never holding below vwap. I blogged about this a little bit (I think in an earlier post or maybe that was prior to starting the blog and just writing on my computer), about how buy-ins were most likely programmed around vwap rather than just a market order to gtfo (to the detriment of those being bought in probably). During these days the best option was to buy weakness and sell strength.
However as it grinded up to the highs from first float rotation days and hit the prior double top there was a change in character.
True triple tops are very rare, they can of course be a shorter term zone, but to have a longer term top at a triple top is rare, so as GENE broke this triple top zone on enormous volume (trading the float in about an hour), the attack plan changed.
$4.50-$4.75 is this breakout zone. GENE gapped above this on enormous volume and from there buying flag breakouts/ascending triangles, paying the offer rewarded the trader, and then selling into extreme strength (or perhaps after slight pause in momentum shown by red 2 minute candle).
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