Here’s how you trade a "goofy little stock: like Renren (RENN).
Discussed in this article: Renren ( $RENN )
I want to look at Renren ( NYSE:RENN ). This goofy little company here, sub $5.00, typically it’s not the kind of stuff that I look at but when I see a stock that’s up nearly 10 percent in a day it gets my attention, even if it was a ten-cent stock and it went to $11.00, I mean I would at least see it. So I was looking at Renren ( NYSE:RENN ) and this is what I’m seeing, it’s kind of interesting; forget about the moving average for a bit because that’s not going to matter, but look at this bottom here, and look at this trend break.
Now, let me show you something totally random, Gold ( NYSE:GLD ), again forget about the moving averages, but do you see when I’m looking at here? You get a major trend break here; well we could do this and it just broke, or we could do this, which was the one that I was really looking at with Renren ( NYSE:RENN ). So we get these three little pullbacks here, but two of them, huge bottoms, a breakout, and the stocks moving higher. So we look at Renren ( NYSE:RENN ), you see it, one, two, three.
Now I don’t really care so much about the three-count like, “Okay, so you count one, and two, and three, and then a trend break and it’s off to the races. Now we start looking for a two-count or a five-count and we’ll start calling ourselves Elliott wavitition’s or something.” All I’m saying is that this looks like it’s put in a bottom, it’s broken this trendline, look at the volume the last big volume spikes have been green except for this one, and this had like an intraday turnaround, closed near the low of the day, really ugly, it will take two days for the stock to chew through all that resistance and now it’s up even higher. So this one big volume spike, this one negative volume spike actually turns out to be a positive for the stock.
So what I would suggest doing is, if you like this stock, and it’s your trade it isn’t mine, but if you like this stock take a little bit here, only a little bit, because if the stock keeps going higher that little bit is going to turn into a lot of bit. Here’s your support line, so hopefully the stock, in the next day or two, is going to give you another pullback, another opportunity like this, and if it does that that’s when you want to take a bigger position. Ultimately I’m looking at Renren ( NYSE:RENN ) as having put in a bottom, and the stock is starting to move higher, so it’s just your determination as far as whether you want to be there or not, but that would be how I would trade this stock.