Profitable trades in the stock market slums.

01/25/2022

When “Big Board” stocks turn sideways to down, where exactly are you supposed to find short-term trades with sizable gains?

Well, there are a number of ways to do it, but the OTC world offers plenty of opportunities…

…you can lose your tail, too.

In fact, registered reps at wealth management firms have it beaten into them to avoid even talking about OTC stocks, let alone companies listed as “pink”…

And that’s probably right… for the average client.

But for traders and seasoned investors, it’s worth taking a swing if you understand the risk…

Let’s look at International Star, Inc. (OTC:ILST):

OTCs can return from the dead in an instant, so I’ve charted from May of 2021 on the daily time frame when the action started…

Before this, any money here was held hostage and only good for churning out small gains…

And charting low-volume stocks rarely ends well unless you know what to look for or have an edge from doing your due diligence.

(This is an important aspect of Trickshot trades.)

However, ILST is passed that and has enough volume to be tradeable for now.

Although the differences between levels do offer great profit potential, the Fibonacci Retracement drawn here is less about looking for levels of support and resistance as it is about illustrating the wide range in which this stock has traded.

As I’d mentioned yesterday, managing the trade and knowing the stock’s action is important and, if understood, will save you from headaches.

But in the upper left hand corner, you can see the percentage change from trough to peak — over 4,000%…

“If only I’d gotten in at…”

Yeah… I think as investors we all get that feeling more often than not.

That said, this kind of rise is too much-too quick to be sustainable and what the Fibonacci tool in combination with the price action tells us is that ILST is now on thebackside of the trade…

What this means is that you have to pick your shots carefully and look for the swings.

Now, the RSI on the lower chart shows a neon green box which helps to confirm the backside.

See how there’s a whitish tint to the gradient? That’s to emphasize overall bullishness.

Contrast that to the RSI now (white arrow) and we can tell that the current trend on the stock is down… And although it breached the upward trendline to head back in the upward direction (bottom white dotted trendline), it fell below when it was rejected by the upper white dotted trendline…

On the Volume Profile to the left, there are a couple of thin areas with one of them seeing action yesterday, but the larger volume gap is below, marked by the white arc.

Chances are high that this makes another run for that upper trendline — and with the right catalyst it could break through — before falling further into the lower volume gap.

Even from the current level, that’s close to a ~40% move…

It’s a volatile market, perfect for playing the short term swings.

Keep moving,

(Disclosure: I have no position in ILST.)

 

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.

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