They were right to question the valuation, but it doesn’t matter-what matters is that the stock has gone from $4 dollars to $18 dollars in about 2 weeks and it’s ready for a fall.Īgain, stop-losses were a big factor here.
In this case, a negative report was issued by an independent newsletter questioning the company’s valuation. But it doesn’t matter! That’s pretty incredible to me. At $17 dollars a share, this is a $500 million dollar company that basically has almost no revenues and no profits. You see that within 3 days, the stock goes from $10 dollars to $17 dollars and it hits $18 dollars intraday. The momentum lasts longer than you think possible and towards the end, when the supernova really occurs, the stock prices go up exponentially. Gradual trending is a great signal that a stock could explode because everyone thinks, “ Oh, this stock went from $2 dollars to $8 dollars-it’s probably going to go back down.” But that’s not the case. There’s not much financial information about this company and nobody really knows much about them, but take a look at this gradual trending. All throughout the beginning of the year, the stock was gradually up trending from $3 dollars to $4 dollars to $5 dollars to $8 dollars, with lots of little tiny up days before just goes supernova. Just look at it-it’s a perfect supernova. Normally, I don’t like to play pink sheets, but when you see a chart pattern like this, it’s just amazing. All I know is that it’s a great opportunity to profit. The point is that they explode, and nobody knows why. Sometimes these stocks triple, sometimes they quintuple-sometimes they go up ten times.
That’s why this is one of my all-time favorite chart pattern to trade. The Treatment: These stocks experience massive volatility and liquidity, so it’s easy to buy and short sell shares. All you’re looking for is the possibility that the supernova will occur, and then you can trade based on the pattern. The Symptoms: Supernovas can be triggered by anything, including newsletter mentions, world events, message board hype, and company news. It’s named after supernovas in space and it’s pretty much the same thing, except that you’re dealing with stock prices. The supernova is- above and beyond-my favorite chart pattern to play.īasically, this is an explosion in stock price that creates many different opportunities to buy on the way up and short sell on the way down before fading into oblivion over several weeks or months.
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