Radical Reversal for Dry Ships DRYS with Bullish Surge
It’s not often you see a stock go from beneath $5.00 to $40.00 in three days.
However, that’s precisely what happened post-Election for Dry Ships (DRYS).
How’d it happen and where is it going from here? Let’s learn a few lessons and get prepared:
As chart-based traders, we’re often agnostic to the intricate specifics of what a company does.
We prefer to identify trends and trade retracements or patterns that develop within these trends.
Dry Ships (DRYS) gives us an example to highlight a BREAKOUT from a lengthy consolidation and radical REVERSAL of a lengthy downtrend.
We’ll see the bigger picture on the Daily Chart in a moment, but for now focus on the initial November 10th breakout – on high volume and momentum – and the numerous continuity patterns (bull flags or triangle breakouts) that occurred as price traded higher and higher.
We believe that stocks which are strong tend to get stronger, not weaker and DRYS gives us a perfect example of this “strong getting stronger” concept developing rapidly.
Here’s the bigger picture from the Daily Chart:
If you try to figure this one out with logic, you’re likely to tie your brain in knots.
Focus on PRICE and the breakout reversal on high volume.
The chart above is a split-adjusted view of a downtrend stalling, price dying, investors abandoning, but then returning rapidly the last three trading sessions.
In this type of volatility, drop to the lowest timeframe you can and trade the smaller retracement patterns along the way.
Follow along with members of the Afraid to Trade Premium Membership for real-time updates and additional trade planning.
Corey Rosenbloom, CMT
Follow Corey on Twitter: http://twitter.com/afraidtotrade
Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).
It has really went quite high, so it’s more than likely that we are going to see things turn around rapidly, but at the same time we need to be careful in not trying anything unnecessary. I always keep it relatively simple and thanks to OctaFX broker, it’s ever easy and simple with list of features and facilities present including lowest possible spread available at 0.1 pips to high leverage up to 1.500 while there is also 50% bonus on deposit, so these factors are what helps big time.