C&D Trades

I just went through my scanned list of 323 Cats and Dogs, which are stocks under $5.00, often under $1.00 and with volume that's typically around a few hundred thousand shares a day, until they pop, then it jumps into the millions. There are exceptions, some have better volume, but the thing I've noticed about these trades going back 5 or 6 years is that they like to pop off right at the end of a bull move, whether it's of a month or 5 years duration. The idea seems to be investors feel like they missed the boat, they came late to the dance and they don't want to pay up for a PCLN or a stock like that, so they go bargain hunting and Wall Street seems to accommodate them as many of these trades see to be set up weeks in advance under accumulation.

In the last few days, surprisingly quite a few have popped off, but even more surprising, considering their volatility and BETA, most of them today are showing pretty good relative strength vs. the market..?!?!?

I put some alerts on several so if they set off alerts, I'll bring them to you and you can decide if you want to try them out. The rule of thumb with these trades is take what you can get. These are not going to be trending trades, they often launch moves of 10-50% in a day or two. An example or two today would include WEST @ a 61% gain, OREX at a 15% gain, LEI at a 16% gain, but once more for emphasis, it's not what they are doing today, it's what they aren't doing and that is falling like a rock. Kind of surprising.

In any case, whether you trade them or not, they seem to be a leading indicator for the overall market so their worth keeping an eye on or just check the updates I post on them.