This is as much a comment cleaner as anything else. (Though I see that Toshi put up a post just now)
CHGS is one of my obscure Chinese stocks. I liked the bottoming formation, the fundamentals, the sector. Volume came into it mid-September and then receded. It blipped again, and today came in with impunity.
Moves such as this are generally unsustainable. I developed my playbook of these moves that centers on:
- Protect profits by selling into strength. I sold 1/2 of my position into this surge today.
- Maintain a position in case of a gap and go (which though unlikely, can happen)
- Re-buy the position once it comes back in.
Ideally, there would be a follow through to today's move. However, I have also noticed with these thin and cheap stocks, that sometimes the blast off is merely unloading. The subsequent news is bad, and you are reduced from happy trader to bag holder.
Here's the chart:
I also took a position n BTM today. I thought the Volume by Price profile was constructive.
TRIT is also a stock that I like. I have a position in it. It, too, has recently gained nicely. However, I maintained my position as the spike in price was not as overdone ast CHGS. Here's a chart.
TRIT also has the added benefit of having a super-strong balance sheet (cash per share is $4.07, current ratio is north of 10, and there is no debt). They are in the Chinese water space.
I do not put stops on these thin issues. It is a conscious choice. I buy them for a very specific reason, with risk capital, and with the understanding of the volatility–volatility that often shakes you out when you least expect it.
Because I'm a far better researcher than a trader, finding names such as this suits my trader/investor DNA. Having specific rules on breakouts helps me better manage my position and my risks.
