I find it difficult sometimes to stick to one style of trading or trading strategy. I often bounce between stock and option plays depending on what opportunities present themselves at the time.
Overall I think that being malleable in trading is not necessarily a bad thing, but it’s easy to get scattered attempting different strategies. One strategy that’s worked well this year has been trading stocks that have hit their 52 week high and have recently pulled back. The strategy attempts to take advantage of previous momentum in hopes that the stock, after a decent run to it’s 52 week high it will test the level again and move beyond to new highs.
That being said, you don’t want to simply pick from a list of 52 week highs that have pulled back as that can be relatively dangerous.
So, what will I be looking at next week? As some of you are aware I use stock screens to find lots of my trading ideas. One of my favorite online stock screening tools is developed by the great people at finviz.com. I have many saved screens that I use, but I tend to play around with most of them to find ideas. The screen I’ve been running today for example includes the following:
- Price under $10
- This year performance more than 10%
- Above 50 day MA
- 5% or more below 52 week high
This screen returns over 200 matches, so you’ll still need to sift through quite a few charts for some ideas. After spending some time reviewing charts I’ve narrowed down the following candidates for review.
Planet Payments Inc. has recently hit it’s 52 week high which it failed to break similar levels in 2011 and 2012. This high growth low PEG stock could push well above $5.00 if this level is tested again. Earnings are scheduled for August 2nd, so buying before the announcement may be a bit risky. We’ll definitely be watching this one next week.
Another one off it’s 52 week high with a low PE and low PEG ratio. I’m not necessarily a fundamentalist, however it’s nice to know the fundamentals are on your side when you’re going long. A break above $2.00 could have some legs.
Nevada Gold and Casinos Inc. has seen a steady increase in price from 2013 and has recently pulled back from it’s high after their earnings announcement. Might wait for this one to pull back to the $1.60 before considering an entry.
We’ll keep an eye on these 3 next week to see if there’s an available entry. I really feel like I’ll need to start increasing my share size in the coming months. Trading 200 to 500 shares is getting a little “comfortable” and I’ll need to kick it up a little so I can really feel the importance of each trade.
Please let me know if you have any ideas on the comment section below!!