this week's lesson.
Today we are going to take a look at a few high-volume tickers and how psychology factors in when those tickers are from the same sector.
I want to start with $BPTH, which was a difficult trade to decipher.
$BPTH went from $3 to $70 and presented a decent swing position near $35. This stock traded more volume than it ever has at 40 million in the $70 area, and with an average price of $50. $BPTH doesn’t have the risk-reward we are looking for because there’s not enough room to fade after hitting $70 and bouncing at $40. Supernovas like this typically drop 75% of their own gain, and we see that with hits at $27 when people are shorting in the forties.
$BPTH is followed by $AKTX, which I stayed away from as it traded almost…
…100 million shares in a day and was optioned. Even though I didn’t play this ticker, $AKTX shows you how very crowded stocks will react. The squeeze went to $10 and started losing volume before cracking the support out of nowhere because there’s not enough people trading. We call this a sympathy play because volume doesn’t have much to do with it; $AKTX is a tech stock, which is appealing to most traders regardless of criteria.
$AKTX has two similar tickers, $ATOS and $SLNO
Looking at the intraday chart for $ATOS, we see it was near $.02 before losing momentum and then turns around and squeezes back up before gapping down. We saw $AKTX have a similar gap up, which led people to believe that the two tickers would react the same; however, on the second day of $ATOS, we see a gap down that went to -50%, and $SLNO isn’t far behind. $SLNO has a larger float than the other two, but after cracking in the afternoon we see this ticker dump straight back to its starting point.
$SLNO has a larger float than the other two, but after cracking in the afternoon we see this ticker dump straight back to its starting point.
Other than volume and market caps, $AKTX, $ATOS, and $SLNO are closely related because they lead to emotional trading.
It’s better to go in on stocks like this as they are coming down and form specific resistance; otherwise, it’s incredibly hard to predict where it’s going. We also see how human psychology plays out with these stocks, especially when they are from a hot sector like Bio-Tech. Instead of looking at criteria, you will see people reacting to these tickers solely based on how the last ticker performed. When you have 90% of people thinking that way and leaning towards one side, the stock tends to perform oppositely.