Hey 5-Star Trader,
Ticker’s prices fluctuate daily and it’s not uncommon for some to experience extreme action to the downside. However, of those tickers, a select few end up rallying and making incredible rebounds. It should be every trader’s goal to identify stocks of these moves before they happen so they can capitalize on the opportunity, but what “clues” should we be looking for?
Below is my checklist when trying to identify the next rebound ticker…
- High Short Interest
Stocks with high short interest often make explosive moves. If you catch it at just the right time, you could get in right before a huge move to the upside. - Float
Float is a term that refers to the number of shares a company has available for people to trade. Typically, if a stock has 20% or more float, I will keep them on my radar. - Hot Sectors
Consider hot sectors. Is the ticker you are looking at on a down day but within a hot sector? If yes, they could experience an upward move depending on market behavior. - Price
If stocks are cheap it could be an incentive for new momentum traders to pile in, thus driving up the price. - Media Coverage
Medica coverage is another way to drive new buyers into buying a stock. Keep an eye out for companies that are getting covered in the news because it could be your signal to get in before everyone else. However, you should consider what kind of coverage a company is receiving. If it is bad press, the stock could fall even further. - IPOs
New initial public offerings (IPO) are some of the best rebound stocks to get involved in. They are heavily shorted and then all of a sudden, some news can come out, and BAM! They are shooting upward.
It’s important to note that my checklist encompasses the traits I look for when trying to identify a rebound ticker, but a ticker does not have to have all these traits in order for me to be interested. A ticker with two or three of these traits will typically pique my interest!
