It’s no secret that it has been a wild week in the markets. The Dow has now erased its gains for the year, oil is in a bear market, and there seems to be a new Ebola headline causing volatile moves every hour.
So how do you play this? Our gurus have been watching Ebola stocks carefully and are sharing their insights with their students in video lessons, chat rooms, and watch lists.
The first Ebola related stock is Lakeland Industries (LAKE), a maker of hazmat suits, which are used by people treating those with Ebola as protection. The stock has soared more than 200% this month due to growing Ebola fears.
Also note that trading volumes are through the roof! Upwards of 47 million shares exchanged hands Thursday. The average daily volume for the stock over the past three months is just 616,000 shares.
This is a small company (market value of about $100 million), so traders need to act with caution, as our gurus have been preaching. It is also a company that is losing money. In the second quarter, they lost $384,000.
So what are each of our gurus saying and how are they playing companies like LAKE?
Let’s start with Investors Live. In one of his video lessons this past week, he went over LAKE intensively. “This is a very wild stock and it’s important to stay safe in this market,” he told his students. “You have to know at what point the prior move no longer matters, and if you’re shorting pops, make sure you’re covering dips,” he added. Nate went on to say that you shouldn’t build on a position in a stock like this is it moving against you. “You WILL get smoked the way that this thing was moving.”
Another Ebola stock is Tekmira (TKMR), a drug maker. With this stock, Nate said he would alsys take his profits rather than wait it out and try to time it perfectly. “When that stock goes from $25 to $23 in a matter of seconds, I’m taking it I don’t care. As much as I complain about missing out, you can never take away those profits from me. I’d rather take the instant profit and gratification.”
Tim has also been following these stocks carefully. In one of his video lessons he reiterated what Nate was saying in that you need to be extremely careful. “I trade very cautiously, but some of my students bet big and they have to be careful especially now. Shorting stocks like LAKE, you have to be careful and pull back a little bit. This is sometimes tough for traders to do because they want to get rich quickly and in less volatile markets that sometimes works,” he said. “You don’t know how high stocks like LAKE could go, it could go to $100, it’s not likely, but you never know where the top is with hysterias and viruses…Keep in the back of your mind that this could get really really scary.”
Tim made a trade on LAKE and lost, teaching his students a valuable lesson. “I was warning people not to short this thing like crazy. I was short but got out quickly (to limit losses).”
Here are the details of the trade:
$4,195 loss on LAKE. Short Stock by Timothy Sykes
Entry comments: Fading, looks to be going red, goal is to make 50 cents – $1/share as panic sets in. Exit comments: Terrible trade, thought it’d go red, fell into classic trap of anticipating in order to give better alert, I need to have patience, these will all pop eventually, but luring in amateur shorts like this is just pathetic.
And here is a note from one of his watch lists:
Same thing with LAKE when I shorted in the $14s today…very speculative, very small position, but when it didn’t breakdown I got out fast and made a lousy 10 cents/share…better than being down $5/share had I simply held all day…again I was wrong, but as I said in yesterday’s watch list “potential shorts, but be very very careful since this is spreading and you can’t predict breaking news of more cases or not”
Then we have Superman, who made money trading LAKE but also exercised caution. Here is a note from one of his watch lists.
$LAKE Pattern Was Perfect Watch List Winner Yesterday !!!bysuper_trades
$$$ DAILY THOUGHTS $$$ $LAKE was big winner off watch list yesterday on the 2-3 day rest pattern….…Market is very choppy right now…any new longs need a strong reason……watching for dip buys on strong stocks…… Maximize gains with the winners and minimize losses with trades that do not work….!!! There are three types of trades I do…learn them and the rules to them !! if you are new to this service read all the required reading material first and welcome !!! ……………FOLLOW RULES NOT PEOPLE !!! …..when I do not follow rules I lose $$……………
And here is his trade in LAKE and OBCI (yet another Ebola related stock).
$2,000 profit on TKMR. Long Stock by Super_trades.
Entry comments: Speculative TRADE on news personal stop loss low 25’s and personal target 27-30 plus if it works and gaps on news…..small position so not much at stake for me BAD EXAMPLE chasing but small position for me. Exit comments: not seeing gap yet will take small profit and watch for re-entry.
$7,573 loss on OBCI. Long Stock by Super_trades.
Entry comments: small position TRADE as chasing a bit (bad example) personal stop loss 4’s and personal target 5-6 plus if works …mention that their disinfectant can be used for Ebola Exit comments: stopped out for loss.
So the main lesson on these volatile trades? BE CAREFUL! As Investors Live also said in a video lesson, “Just one trade can wipe you out.”