Three Day High Growth Stock Swing Play Characteristics

Three Day Growth Stock Swing Play

High Beta Growth Stock

·         NO Ceiling on their earnings

·         Cocktail party chatter / Buzz around the stock

·         Do NOT trade based on Price Earnings Multiple

Determining if it is a growth stock

·         20% or high short interest

·         ATR of over 2 in recent trading

·         Important technical level to trade against

·         Little technical resistance above it

·         Increasing Volume recently

·         Good swing trade / tough to intraday trade

·         History of explosive moves

·         Risk to reward should be 10 to 1 or great

·         Pundits on TV or writing articles about how overvalued the stock is.

Growth company characteristics

·         Significant market share expansion for a new product

·         Most profits reinvested back in company

·         No dividend

·         Increased public interest

·         Polarizing views on companies potential growth

·         High earnings volatility

·         High short interest  

·         Attempts to value company by historic means will ultimately underestimate short term price target.

1^st Day

·        Closes above key level.  Showing strength above technical level.  Should be up significantly more than the market.  If market down it should still be up.  

2^nd Day

·         Holding above first day highs.  Very little battles.  Keeps going up.

3^rd Day

·         Gap higher that fails to hold above highs of the previous day.  Trade needs to be exited.