I am putting this post in the ‘trading flashback’ category. It is a category where I look back at trades I have talked about and try to introspect as to why they either failed or succeeded.
I first mentioned CORS Corus Bankshares on August 12th in the evening. It was trading at .33 cents at end of day August 12th. Today we hit an intra day high of .65 or almost a full 100% move in just two days. Clearly this is the power of penny stocks and outsized potential returns, but with added risk.
On my first post on CORS I said and I quote:
First CORS needs to get above .33 and close up above that level. I would prefer to see a full price bar above .33 as a signal that a big pop could start. I think we have a good shot at the beginnings of a breakout type move tomorrow and then maybe a low volume pullback Friday, and then the real run early next week sometime.
As it turns out the run did not wait until next week.
I would describe this setup as ‘decent’, but certainly not perfect. It was good because it had a somewhat saucer shaped bottom formation (see drawn in red line). It was also good because the heavy volume of the last 6 days or so was much higher than average AND it was occurring under the longer term resistance line. I like to see that because it is evidence of building pressure under a resistance area and can lead to big moves.
It is a bit curious how heavy the volume was today and while price had a big move it was no where near what it probably should have been given that volume. Also CORS has a mid range close today which is evidence of supply coming in. Clearly the time to have exited this trade would have been today.
CORS has quite a heavy short position and that helped fuel part of the move today.
The nice thing about the CORS setup was that it happened on the same day the DOW was down 150 points. But the general market weakness probably helped to give CORS a mid range close. But the CORS setup is a great example of how individual stocks can move on their own time clock regardless of what the ‘averages’ are doing.
There was another little hint on the CORS trade that helped to give it a higher probability. A similar bank stock with symbol GFG had a big breakout a couple days before CORS. It can be very useful to see what other stocks are doing within an industry sector as a clue in determining if they might do the same. Google finance has a nice feature to help with this. If you go to google finance and type in any stock symbol, it will show you at the bottom a bunch of symbols that are in the same industry.