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3 Nov

3 Overbought Stocks Under $5 To Consider Short: RAYS, LF, SINO

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As an active swing trader, I make my money pouncing on short term buy and sell opportunities in the market. Readers are often shocked to see me profit from buying a stock one week and then shifting gears and profiting again selling it short the next. Wall Street is not a place to fall in love with stocks anymore and my proven strategy is helping thousands of readers realize that and more importantly, profit from it. Here are 3 of the many traders I’m looking at today.

Shares of Raystream Inc. (OTCBB:RAYS) continue to be manipulated by a $3 million dollar plus promotional campaign. Wednesday at 2:36 p.m. EDT the stock suddenly fell -16% for no apparent reason from $2.50 to $2.10 before stabilizing into the close. RAYS is being promoted by the same team that touted Lithium Exploration Group (OTCBB:LEXG) which fell 66% in one day back in the April after squeezing shorts over a 2 month stretch that took shares from $.12 cents to $10.65 before crashing and burning, never to return down 94% just 6 months later. I’m watching the $2.00 range to see if this was merely a shake or the end of this big budget promo. My current target is $2.13 to $1.72. If the stock continues to be touted up the chart I’ll consider trading the upside momentum with a watchful eye and look for a new short entry.

LeapFrog Enterprises (NYSE:LF) beat Wall Street estimates and upped their full year outlook which has taken the stock right into overbought territory. Long term I wouldn’t be surprised to see shares trading above $4.80 on news like this but right now that is resistance from about 6 month stretch on the 1 year chart from back when it gaped down in January. As with any overbought stock, I’ll look to short a spike just before resistance at $4.80 as that is where I expect the sellers to show up again and create problems for the bulls in the short term. Wednesday’s high was $4.85 before shares closed at $4.49 illustrating my point.

Sino-Global Shipping America (NASDAQ:SINO) recently ran from $1.40 to $9.16 across 3 trading days back in July before giving back 83% pretty much returning to where it started. Wednesday shares jumped from $1.52 more than doubling to a high of $3.47 before closing at $3.11. With a tiny market cap of $9 million this can be a very dangerous short so I’ll wait a few more days to see if it squeezes aggressive short sellers like it did last time before I consider trying to ride the next 83% collapse.

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