Each day, I make it a habit to update my watchlist, enabling me to identify the most promising opportunities out there.
As the list evolves daily, it prompts me to ask myself what strategy will work the best, and how will I best approach them.
Being prepared is essential, and throughout my 20+ years as a trader, I am constantly adjusting my watchlist to help me focus on those key opportunities as soon as the opening bell sounds.
As we are faced with a short trading week and today’s early market closure…
Time is limited for us to capitalize on the incredible opportunities we are seeing in this incredibly hot market!
Without wasting any more time, let’s dive into the top 3 stocks on my watchlist and discuss my trading plans for them.
Table of Contents
Stock #1 – Applied Optoelectronics, Inc. (NASDAQ: AAOI)
I’m sure all of you have heard of AAOI before based on my previous trades, but I typically don’t forget about a stock after I trade it once…
I often find multiple opportunities along the way.
Here’s the chart…
Looking at AAOI, this is the only multiday runners that I like right now…
And if you’re familiar with my strategy, this fits right in with my 7-step PennyStocking Framework.
The longer you trade, the more you’ll start to see these patterns repeat, which can help you prepare for what your next move should be.
AAOI reminds me a lot about Cloudweb, Inc. (OTC: CLOW)…
Be sure to go back and look at the chart, and look at my previous trades to help you see what my exact thought process was every step of the way.
Frankly, AAOI is the best stock out there right now, and I want all of you to be keeping an eye on it.
I’m looking for a big morning panic, or a strong breakout, which it did on Friday…
But with solid volume and news surrounding AI, I think this play could continue higher…
I’m not looking to chase right now, all I’m doing is patiently waiting for it to panic and see what happens over the next few days.
Maybe there will be an opportunity to buy another breakout as the stock consolidates, but only time will tell so make sure this is on your watchlist for the days ahead.
Stock #2 – SoundHound AI, Inc. (NASDAQ: SOUN)
SOUN is an AI play that I’m closely watching.
The stock has a history of spiking, but in the chart above, you can see it’s potentially setting itself up for a breakout.
Now, remember to look and wait for a stock to have a solid breakout…
Way too often I see newbies buy the initial break out and then the stock gets batted down by short sellers.
You can see the stock briefly broke above the $5.00 mark before dropping, so be sure you know what to look for when it comes to this strategy.
If there is more volume or news with this play in the coming days, it could easily break out…
But it’s been a little choppy so don’t try and force anything if there isn’t a pattern there for you to take advantage of.
Look for a potential dip buy, but I wouldn’t get too overly aggressive with this trade.
Stock #3- Black Diamond Therapeutics, Inc. (NASDAQ: BDTX)
BDTX was a huge spiker last week, and I’m going to be watching this closely to see if panics…
But with the decrease in volume as of late, I’m not going to jump right into the first dip I see.
I’m still being extra disciplined with my trades, but this stock doesn’t have much of a history of spiking, so I wouldn’t be surprised if it starts gradually declining…
Which it has done in the past, so don’t get caught in that trap when it just fades throughout the day.
Be sure to wait to see if there is that quick panic of 5-10% early in the morning, then look to lock in that quick dip buy.
Be sure to focus on key resistance and support levels to help gauge when to enter your trades…
And keep an eye on Level 2 to see if there is a wall of buyers to help the stock bounce as it breaks through that key resistance level.
Stock #4 – Diversified Healthcare Trust (NASDAQ: DHC)
DHC is a multiday, multiweek runner that I’m still watching for a potential dip buy or strong breakout.
You can see that DHC has started to slowly bounce back from a previous resistance level that it broke through earlier in the month, but volume has started to fade.
Looking at the history of the chart, the stock has a history of declining before it ramps back up.
Right now with the latest bounce, it looks to have held that key support level, so I’ll be watching for it to continue its run.
Keep an eye out for any news alerts or possible short squeezes early in the morning as we have been seeing these over-aggressive short sellers lately that are trying to beat the stock back down.
Final Thought
There will be times when you may not have any stocks on your watchlist that are trade worthy, so don’t go try and force a trade.
More often than not, I end up finding other plays thanks to StocksToTrade Breaking News, or spot another giant short squeeze early in the morning by focusing on big percent gainers that may dish out a dip buying opportunity.
Keep scanning the market, but since these four stocks I shared with you today all have potential, don’t just brush them off if they don’t do what you want them to do today…
They could easily offer an amazing opportunity a few days from now.
I’ll see you in chat.
-Tim
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