If you’re under PDT, trading part time while working a 9-5 to grow your small account,
this is the perfect trading strategy for you.
I traded part time for years while working a full time job. In part 1 of this video,
I talked about how I managed my time meticulously daily when I was working 9-7 5 days a week,
sometimes even 6 days a week. But i still managed to study the markets 2-3 hours every
night and premarket, trade 1 hour at the open, and power hour right before the close.
And one of the strategies I used to grow my small account while working part time, was
to buy stocks overnight as a swing, and sell the next morning for a potential premarket
gap up, or a morning spike. For those under PDT, this is great news for you, because an
overnight buy doesn’t count as a day trade.
So in this video, we’re going to talk about the 3 criteria I look for when I buy a stock
overnight as swing. We’ll talk about the technical setups, potential risk reward, and
i’ll be going through step by step on how to find potential overnight stocks for free
on finviz.
But of course, the most important criteria of this overnight swing set up, is to tap
the like button. This strategy won’t work unless you’ve done that.
Lets get into this, the first criteria i look at when I am looking for a swing overnight,
is the daily chart. So lets look at this daily chart for SDC. If from purely technical analysis
stand point, speaking I want to see the current daily candle, closing above the previous candles.
I don’t normally look at the wicks on the daily chart. I look at opening and closing
price of a candle.
So what does that mean exactly. You guys know I don't believe in patterns in day trading.
But I care more about that when Im swing trade and buying stocks overnight. So when daily
candle is closing above previous resistance, it means the stock has enough buyers to clear
the overhead supply from the sellers.
So looking at this stock SDC, on this day the closing price was around 13.72. And if
we look at the daily chart, the closest resistance levels are, of course, the previous day at
$12.17, which also correspond to the resistance levels in beginning and mid nov here 12.20s.
We cleared the resistance around 12.20’s, but where is the next resistance line, that
would be here 13.50, and if you go further, 15.30. So that means we have cleared both
of these closest resistance levels here, and the next resistance level up would possibly
be 15.30. So this would be an extremely bullish daily chart. and very important for an overnight
swing.
While we are on the daily chart here with SDC, the second criteria i need is volume,
and ideally, increasing in volume downhere at the volume. You can easily see the volume
on stockcharts dot com here. The buying volume is gradually coming into the stock. And even
the volume candles are closing stronger than all the previous red selling volume bars.
Very important thought, while the volume does not have to be increasing steadily like SDC,
you definitely want to avoid swinging overnight charts like these. This what I call barcode
chart. There is just no volume whatsoever on the daily. Usually these are stocks less
than 100K daily average volume. You can see the daily volume average in each stock when
you go to finviz dot com.
The key here is to look at average volume. Ideally i want something more than 500k daily
volume to swing overnight. Because otherwise if there has been times when im stuck with
liquidity issues, especially on some of these thinly traded penny stocks, and even mid cap
and large caps too, and i couldn't sell. So daily average volume. Very important, you
don't want to be stuck with 40 cents spread and end up holding the bag.
So before we go to the next criteria, let me just show you on finviz on how to look
for these stocks with the ideal daily chart. And give you my analysis based on the 2 criterias
i just mentioned..
Finviz is a great free tool for beginner traders, part time traders. I used it when i was trading
while having a job. Its great for looking for overnight swings, or possible day trades
gap up scanner thats free. Its but the best, but it does the job. Free tools can only go
so far right.
Okay so now we’ve gone over the first two criteria, which are all based on technical
analysis on the daily chart, let's talk about the third criteria for this swing overnight
strategy, which is a fundamental catalyst.
I consider myself a mix of both a fundamental and technical trader, meaning I don’t trade
just based on candlestick patterns, or just the fundamentals, I’m a mix. I want both
the fundamental catalyst and the technical set up to align. That strengthens the thesis
in both my day trade and swing trade. And its the same when im swinging for a few weeks
or just overnight.
So what kind of fundamental catalyst are we talking about. Well it could be positive earnings,
new partnership or contract deals, positive biotech data. To sum it up, basically its
a positive news that could potentially increase the companies’ earning potential short term.
Remember, The stock price increase or decrease is based on teh future earning potential of
the company. So if a company has brand new contract lets say with Walmart, which is a
big retailer giant in north america. Okay actually just in the US. I dont liike walmart
in canada. Its pretty sketch. I prefer the Great Canadian superstore. And whole foods,
owned by AMZN.
But anyways, a contract with Walmart or any big retail giants would mean that this company’s
earning potential will likley drastically short term, so thats a bullish fundamental
catalyst. Another example of what I really liked as a catalyst for overnight swing, is
sector hype or sympathy.
I have talked about sector hype, or bubbles in these few videos before, but basically
if the stock is in a hyped up sector, and the daily chart is technically bullish according
to our first 1 and 2 criteria, then that would be something I'm interested in swinging overnight.
Some good examples of sector hype in the past few years are, blockchain bubble of 2017,
cannabis stock bubble 2018, shippers 2016.
So let’s look at SDC, or example from earlier. We already know that the stock has technically
bullish chart. But does it meet our criteria number 3? Looking at my Benzinga research
tool. You can see SDC smile direct club had recently launched a line or oral care products
at Walmart. Thats big news.
SDC would then be a good candidate as a swing overnight on Jan 15. I like to enter in the
last hour of the trading day from 3pm to 4pm. Becuase that gives me time to look at how
the stock is holding up intraday and if its closing strong. If it is and it meets all
3 criterias we talked about, then I’d long it near end of the day, and sell it into a
potential premarket gap up or a mornign spike.
I actually messed up on my very own SDC swing. I entered too early on Jan 6, and got stopped
out too soon, so i took a loss on that swing, only to see the thesis work out perfectly
few days later. Im not a perfect trader guys, and I probably never will be, im only human
afterall.
But this next example is a good example of this overnight swing strategy working amazingly
well with solid risk reward. Pinterest.
So on Jan14 when I took the swing position on PINS, we can see tehcnially on the daily,
the candle is closing at 21.50’s. This is an IPO stock, so not a lot of chart history.
But the closest resistance level we can
see is
the close of this candle right here on the daily gap. Which is at 21.28.
Lets look at volume now, is there an increase of volume on this day. Yes there is, you can
see PINS stock traded 35 million shares in comparison to the daily avg which is 11M shares.
Now fundamentally, PINS has this amazing news of a market data report showing that Pinterest
has surpassed Snapchat as the third-biggest social media platform in the US in 2019, with
9% year-over-year user growth.
You might be thinking, oh they have more users now, big deal, I just got 2 more lambos too,
which is a bigger deal lets be real. But the key is, Pinterest is considered a social media
platform, just like Facebook and YouTube. So the key to these kind of company’s revenue
growth, is their user base growth.
Just like this channel, the key to having me make more videos that help your trading,
is if you gently tap those like buttons for the YouTube algorithm. Doing so will help
push these videos out to more traders like you and I, and if you’ve found them helpful,
I’m sure many others will too. It’s a win win win situation for all of us.
So this stock meets my criteria of bullish technical daily chart, and increase in volume,
and it has a fundamental catalyst. So i longed the stock at 21.6 on Jan 14, sold half into
the morning spike at 22.40 the next morning, and the rest of it at 23.8 on Jan 17.
Is the overnight strategy going to guarantee you 100% success rate, absolutely not. But
with the three criteria I mentioned in place, the chances of these overnight swing working
out is dramatically higher. And its a perfect set up for those who is working a full time
job trading part time, under PDT ,and grwoing their small account.
If you found this useful helpful, make sure to subscribe and riing that notification bell,
because next week, I’ll be showing you another one of my favorite long strategy suitable
for the part time tradings growing their small account. We’re just getting started here
my friends.