If you were hoping this would be a nice, boring week in the stock market… well, we’re not quite there yet, unfortunately. We wanted to give a quick tutorial on a recent trade we made money from this last week in one of our favorite stock alerts services.
The Market Is HORRENDOUS!
We once again started Monday’s session with a limit down open, even after the Fed pulled out some of its last-ditch policy guns by slashing rates to zero and launching QE4.
And, as millionaire trader (and our mentor!) Kyle Dennis predicted in his Sunday night email, the weak stock market reaction to that news proved especially harsh for the coronavirus catalyst names from The Trade With Kyle premium watchlist.
In this environment, where the Dow gives up 3,000 points in a day, it’s easy to get overwhelmed by the magnitude of the situation — so my best advice is to stay small. You can extrapolate that advice to your position size, certainly, but what I’m talking about specifically today is micro versus macro.
In other words, I’m not out here trying to call tops or bottoms for the stock market as a whole. I’m simply looking for proven setups to present themselves in individual stocks, and then acting quickly to execute on those ideas so I can keep up with the accelerated pace of the market. Take the trades as they come!
And returning to those coronavirus catalyst stocks that got hammered on Monday, our trade yesterday on INO is a great micro version of a tried-and-true chart pattern.
Plus, spotting it quickly allowed us to make money buying the shares, even on a day the stock (and the broader market) was taking a bath.
If you’ve been hesitant to participate in this crazy market, or simply unsure how I’m finding some of my day trades, here’s an inside look at the INO chart setup I was playing.
INO Two Weeks Ago vs. INO Yesterday
INO was a big TWK winner in the early days of March, as Kyle Dennis collected well into the five figures on a few different trades, all playing the stock’s big virus-driven run higher.
But if I showed you this stock chart and told you I made money buying shares, you probably don’t have too many questions about “how,” right?
INO hourly chart from 2/28-3/6
But fast-forward to yesterday, and here’s a quick round-up of the daily percentage returns for a handful of corona stocks. Like INO, all of these are names that we bought for gains within the last week or so.
- AEMD: -14.58%
- BCRX: -20.81%
- GNMK: -8.65%
- AIKI (formerly SPEX): -23.57%
And right in line with those sector names, INO finished the session down more than 14.86% from last Friday’s close.
So it might not seem like the easiest day to buy the shares for a $4,000 win, but that’s what Kyle Dennis did right before midday on Monday.
Here’s how he spotted the INO buying opportunity.
Finding a Buy Zone on a Plunging Stock
After the limit down opening for stocks, which included heavy losses for those pandemic catalyst names, Kyle Dennis noticed some coronavirus plays were starting to catch an intraday bid. INO, after gapping down big to start the day, was one of them.
Fundamentally, the market was way lower on corona concerns. With INO being a coronavirus stock, it looked like the shares — which were finding a steady floor around $5.75 intraday — might be catching a “safety” bid, since it’s working on a vaccine.
Plus, INO’s comparator, MRNA, had just dosed its first patient for a vaccine, and was rallying sharply around mid-morning.
On top of that, INO was forming a bull flag pattern on an intraday chart.
Kyle Dennis used a one-minute time frame, but you can see this reliable pattern taking shape over any intraday time frame you prefer.
Below, I’ve outlined the pattern in blue on a 10-minute chart, so you can also see the area of the gap around $6.80 Kyle Dennis was targeting for the potential run higher (blue arrow).
As you can see, we jumped into INO right as the stock was breaking out of its bull flag on an intraday chart. Surprisingly, despite the craziness of the market and the sector, this is one of the most “vanilla” (and reliable!) chart patterns you could play.
INO 10-minute chart, 3/13 & 3/16
Kyle Dennis’s entry was shortly after 11:09 AM, with the stock at $5.90. And even though he was playing a very standard chart pattern with a solid fundamental catalyst, he still didn’t want to overstay his welcome.
So, in deference to the market volatility, Kyle was ready to take profits quickly when he had them.
Pinpointing the INO Exit
Just over an hour later, INO had peaked at $6.47 and pulled back. The high occurred near the descending 20-unit moving average on a 15-minute intraday chart, and INO subsequently dipped below a trendline connecting its series of higher highs for the day for the first time.
That hint of weakness was our cue to take profits. Kyle Dennis sold his shares not long after noon at $6.21, for about $4,000 in gains.
Below, I’ve called out the first surge to a new session high that occurred on the initial breakout from the bull flag, as well as my entry point (denoted by the blue arrow), so you can see all those key elements together with the exit price.
INO 15-minute chart, 3/13 & 3/16
So, using the old faithful bull flag pattern and some active trade management, we snagged quick intraday profits going long on a coronavirus stock that gapped lower — and stayed way lower — all day long.
How’d You Do on INO?
I know several other subscribers like Waleed joined Kyle in holding INO for a quick, one-hour trade on Monday:
A fellow repeat customer on INO!
And I’ve heard from others who have had success with Kyle Dennis’s watchlist stocks, or hunting down your own trade ideas:
Great trading, Joe!
Or at least let us know what you’re hoarding… we’ve got a good stockpile going of beans, rice, water, and pasta!
Pretty much the only things we are buying and holding right now, tbh.
Kyle Dennis is STILL killing it in this market by trading simple patterns, staying nimble and being very risk averse. We have made some money but also lost some – it is HARD out there!
However, we have not lost as much money as we would have if all our capital was invested long term in blue chip stocks.
Russell and Maleah