Breaking News on $DHRM +$1836 in 15min
Hey Guys! What a morning! We nailed a trade on $DHRM today. My first entry was at 2.10 based on a scanner alert. When I first saw $DHRM on the HOD Momo Scanner (scanner settings here), I remembered it as being a former runner. This is a stock that in the past has made 100% moves. One of the advantages of spending years in the market is that you become familiar with some of the fast moving stocks. So when you see one of those familiar names hit a scanner or report breaking news, you prioritize it higher than everything else.
One Big Breaking News Trade
Former Runner & Short Squeeze Potential
As you can see on the $DHRM daily chart, this stock is a former runner. We traded it back on the day in December when it went from 2.00 to over 4.00. It’s a stock that has the potential to make huge moves. So what gives a stock this potential? $DHRM is a Low Float Stock. A stock’s Float is the number of shares available to trade on the open market. This can be considered the Supply. When a stock has a very limited supply, and demand suddenly spikes, as is often the case with breaking news, the stock will spike. A short squeeze can fuel this spike. If there are a lot of traders who are holding short during the spike they may decide to cover for a loss, which means they are buying. So you have the combination of buyers who want to make money on the squeeze and buyers who are covering losing short positions. That means lots of buying on a stock with limited supply, and that creates a squeeze!
The Breaking News Headline
At 9:42am a press release was issued stating “Dehaier Medical Receives US$20 Million Strategic Investment from Liaison Interactive” – Market Watch. I didn’t see the press release. Press releases are posted all day long and most of them don’t result in much price action. I wait for stocks to hit my stock scanners, then I look for the catalyst. What is the reason this stock is spiking up on massive volume? A quick search on Market Watch or Benzinga will give us the answer. Sometimes stocks spike for no apparent reason, and these are often good short candidates. Stocks that go up for no reason typically come back down quickly. In fact, stock that go up with a good reason often come back down quickly as well because the move up gets over done. This happens when momentum trades (like myself) jump into the stock looking for a piece of the action.
The Stock Scanners are FREE for Students!
This is another day that I hit my daily goal trading off of stock scanners. These scanners are so finely tuned I know when something hits them in Yellow (like $DHRM below), it’s a big deal. These scanners are included for FREE in our Day Trading Course. They are the culmination of thousands of hours of trading experience, condensed into these formulas. I put all my knowledge of what makes a big momentum stock run into these scanners. Our students are using them everyday and loving them!