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28 Oct

3 Top Heavy Stocks To Consider Short Today Under $5: CAK, GLUU, RAYS

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Last night my free webinar in chat discussed how to short stocks under $5 that are overextended and due to dip. With the European markets red this morning and futures slightly down, I think it’s fitting we add a few overbought stocks under $3 to my previous list of good short ideas. Click here for a detailed article I did Thursday to learn about shorting stocks under $5. Click here to bookmark my FREE DAILY WATCH LIST of potential buys and shorts.

CAMAC Energy (AMEX:CAK) is up over 100% in October with an overbought Relative Strength Index reading of 72.16 heading into Friday’s session. Shares closed at the high of day Thursday meaning CAK might have a little more run in it before early entrants look to take some profits which is only natural. The market cap is $160 million and my preferred broker does have shares available. Earnings are scheduled for November 9th. The trading range here is $1.10 to $.85. If it continues to go up I’ll look for short entry just below the 200 Moving Average of $1.28. I like this company but stock will dip when overbought and therefore make good day to swing trades for active traders like myself and my subscribers.

Glu Mobile (NASDAQ:GLUU) is a stock I like and trade long regularly. Thursday I closed swing trade for around $1,000 in profits on the long side. I took those profits when it failed to breakout from its consolidation pattern in this bull market. The stock is not overbought but seems to be saturated with sellers around $3.10 to $3.20. It did move up into the close Thursday so maybe it’s finally going to break that $3.18 range heading into next weeks earnings, however, after watching my swing long position for days I’m inclined to think GLUU might be ready to pullback Friday, especially if the market takes profits making lower highs as the session wears on. The trading range here is $3.15 to $2.87 – $2.66. A break to the upside of $3.18 could signal a move to $3.45… so having been long yesterday before I took roughly $1,000 in profits, I have no problem switching gears and buying GLUU again into earnings next week if it breaks this consolidation pattern to the upside. Shares are available to short at my preferred broker. The stock has a market cap of almost $200 million and an earnings announcement on November 3.

Raystream Inc. (OTCBB:RAYS) continues to be one of the best short opportunities in the small cap market, but shows no signs of cracking just yet. I’m looking for a decline in volume here or the first down day as a sign of weakening. The goal is to be short when the stock collapses like another pump and dump White Smile Global (OTCBB:WSML) did Thursday. Right now it’s very difficult to find shares to short of these bad stocks but if you’re looking for predictable scores in an choppy market, these are usually good bets if you know what you’re doing. Unlike the other two companies above that are solid small caps up for good reasons, Raystream’s rise is at the hands of promoters who tout the stock to inflated levels until one day the boat tips and the chart looks like Lithium Exploration (OTCBB:LEXG). Timing when shorting trades like RAYS can be difficult and they can often go supernova before they collapse, evidenced by LEXG’s massive run so they are not for the beginner. The Relative Strength on RAYS is extremely overbought at 89.28.

 

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