$BIOS Bioscrip-Here’s a great breakout! And here’s why I couldn’t buy it. (November 26, 2018)
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I want to go over BioScript ( NASDAQ: BIOS ) for you here and this is why: The stock is too darn cheap to trade, frankly, $3.70. That is just a real risky volatile stock because it doesn’t take that much to push the stock in a direction that gives you a bigger percentage move than you are really looking to get. If it’s in the right direction that’s awesome. But if it is in the wrong direction it’s not so awesome.
Here, from top to bottom, the stock is basically like 20 percent; this is a pretty tough trade. Similarly, like back here, maybe the one time you could consider trading it, if you were watching this stock and I wasn’t, was when the Bollinger Bands were this tight. The stock was at a couple of key moving averages and then you are looking for a breakout. Fine, you get it here, but how far can you really expect this stock to go?
One thing that has come through loud and clear on this chart is, where is resistance on this chart, (I just stuck a line here) somewhere around this area. If you look at all the times, going back over a year, the stock hit this 3.25, 3.30, whatever it is, right around there, it’s just a whole bunch of times.
And so here it is coming up to this level and this is my point: If you want to be making this trade you had to have been watching this stock, like stalking it. Just watching it, maybe have an alert, maybe have a buy stop where you are only going to buy the stock, say, if it gets up above 3.25, something like that. Because it just keeps pushing but it never really gets there. And then finally, today, bam, this stock makes a big move, 15 percent in a day.
But if you had just been hanging onto this stock, I guarantee you would have been shaken out about 15-20 times; it’s just been that kind of stock. My point is, for me, and I asked Mark Minervini about this today, and I said, “What do you think about the breakout here or is the stock too cheap?” And his point was, yes, it’s a great breakout but I don’t trade $3.00 stocks.
I’m showing you this not because I think this is a stock that you should buy, look, this thing could be up at 4.50 tomorrow, we don’t know, huge massive volume. But I am showing you this because it is a great chart. This is the kind of chart that you want to be looking for. You want to be looking for a chart that shows some SERIOUS resistance, some serious tightness. Now, this has still been pretty choppy but over the last several weeks this stock had been kind of trading in a range here.
So when you see a stock like this then here’s what you do: You do a Ron Popeil, set it and forget it. You just set your alert and then forget it. And then one of these magical days your alert is going to get hit and boom, now you have a trade. But in the meantime you are avoiding this entire mess, you’re just forgetting all about it.
So you can start doing this; try to do this strategy with other stocks that maybe just have the decimal point at least over to the right one level, as opposed to a $3.00 stock, maybe a $37.00 stock. But keep in mind, that resistance, when it is really, really consistent for a long period of time, when that stock finally breaks out above that level on VOLUME, that is an indication of institutional buying, has to be. I don’t know who was buying this thing, probably several institutions, but somebody was and it pushed the stock up even more.
Watch this stock for maybe some more continuation tomorrow. I don’t know, but I will tell you this, if the stock starts to fall lower I wouldn’t buy it. I would just keep it on your watch list and wait for another setup.
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