Let’s take a look at Beyond Meat (BYND) and Soliton (SOLY) one more time…because they don’t look like they’re done. (May 30, 2019)SOLY BYND SOLY
I want to talk about a couple of stocks here real quick. First of all, Soliton ( NASDAQ: SOLY ) and then Beyond Meat ( NASDAQ: BYND ). We traded both of those yesterday in our morning rotation trading.
Let’s look at Soliton ( NASDAQ: SOLY ), I don’t think this is done. Yesterday was a big move, we got a great trade on that and then got out in the morning before this kind of pullback. The stock traded a little bit lower today to 17.00, which was below yesterday’s intraday low. So the power of the bears, the power of the sellers was greater today than it was yesterday.
I am doing this video with about 50-minutes of trading left, you can see how low the volume is relative to the last couple of days. To me this kind of looks like a blow-off top; it looks like a stock that absolutely needs to rest, needs to recover. But then you get this deal today, where the stock BARELY traded below yesterday’s low and then started rallying. So the take away for me on that is, there are still buyers around, there are still buyers around. They took advantage of this dip, first thing in the morning, to buy the stock. AND there was enough demand to keep the stock up.
What I would do is, forget about the daily chart it’s really not important anymore, this is an intraday trading stock or kind of an overnight trading stock even. If you are looking at the intraday trading, keep it on a 15-minute chart. This is a pretty messy chart because it’s got a lot of things on it. Basically what we are looking at here is the VWAP, that’s the volume weighted average price, is about 21.00. So if you are trading intraday you look at the VWAP and you say, “Alright, if this stock starts falling below the average price based on volume for the day, that means that there are not enough buyers to keep the stock up above the average price. I’m going to sell.”
So if you are buying the stock right now at 22.00 your stop is down here at about 20.80; you are taking less than a 5 percent risk. If you can wait, if the stock falls back to the VWAP and you are able to buy, that’s where the good traders are buying. You want to be on their side; because if the stock then falls further you’re selling for a small loss. You can always buy it back but you don’t want to hold it for a big decline. So the closer you can get to the VWAP the better off you are because it is a lower-risk trade.
Similarly, Beyond Meat ( NASDAQ: BYND ). You will notice, where is this stock? Beyond Meat ( NASDAQ: BYND ) is below the VWAP. That is not where you want to be. You don’t want to see the stock trading below the VWAP., it kind of tells you that the intraday buying is over. And so what I would suggest you do in that case, I would sell it here just because of that rule. Just because if I am trading intraday and the stock is trading below the VWAP for any appreciable period of time I will just go ahead and sell the stock, I don’t want to be wrong. I would rather wait to be right or be in a different stock.
Both of these stocks, though, Beyond Meat ( NASDAQ: BYND ) and Soliton ( NASDAQ: SOLY ), are two stocks for you to watch because I just don’t think they’re done with their volatility. And if you are timing it right you are going to be able to make money on these types of stocks. Very, very low float and because the stocks have traded at very, very light volume the short interest is actually kind of high. When so many shares are trading you are going to see some short covering.