One screen I regularly monitor, for both Canadian and U.S. stocks, is the “Price Spike” screen. I discussed how to filter for price-spike stocks in Swing Trade Filters for Finding High Momentum Stocks. This screen or scan find stocks that have had a lot of recent technical strength. That doesn’t mean every stock on the list is worth buying. Of the 15-20 stocks on the list (usually), every couple weeks one may trigger a trade. I check the list once a week and write down the stocks that are nearing a buy point for one of my strategies. I then monitor the ones that I have written down daily to see if they hit my trigger price for a trade ( I discuss trade triggers in this article).
When trading Canadian stocks, a lot of them have relatively low volume. Keep that in mind when planning your position size, since stocks with lower volume are more inclined to have slippage, especially on a stop loss.
These are not trade recommendations, rather they are stocks on my watchlist which may develop into a trade.
Irving Resources (IRV.CN)
Strong performer over the last year and a half. The stock is oscillating between $3.19 and $2.66 after a sharp move higher. This one will likely need more time to consolidate in a range or triangle. Prices often see a contraction in volatility before a pop (like March 2019). Another common pattern is to see the price drop below a defined support level (hitting lots of stop loss orders) and then run higher, like in April 2019.
Careful, average volume is only 50K. Log scale chart.
Champion Iron (CIA.TO)
There are a couple of things going on here. The price is in a rising channel throughout 2019. The price also may be forming a rectangle or triangle, as it oscillates around the $2.90 region. Breaking the channel to the downside isn’t bearish (in my opinion) as long as the price stays moving sideways and forms a pattern like those discussed below.
This is a similar pattern to Irving. Therefore, I repeat my comments: This one will likely need a bit more time to consolidate in a range or triangle. Prices often see a contraction in volatility before a pop (like April and May 2019). Another common pattern is to see the price drop below a defined support level (hitting lots of stop loss orders) and then run higher, like in February 2019.
The average volume is 1.3 million. Log scale chart.
SilverCrest Metals (SIL.V)
SilverCrest topped out around $5 earlier in the year. It broke above that high recently. There was a rounded bottom trade earlier in June as the price turned the corner higher. The next opportunity will likely come if the price consolidates above that $5 area, like what happened in January. That will set up a potential breakout trade to the upside with clearly defined entry and stop loss parameters based on the consolidation, if it forms. Also, the metal space is looking more attractive with gold breaking higher recently.
Average volume 188K. Log scale chart.
Another stock with a similar pattern to Silvercrest is Alacer Gold (ASR.TO). It recently popped above its prior high. Watching to see if can consolidate and eventually breakout higher as well.
Cantex Mine Development (CD.V)
The price hit resistance at $4.17, pulled back and is now consolidating just below that mark again. With the strength in the metal space, watching for a break higher.
Watch the volume, as average is only 19K! If it does break out, the daily volume should push above 60K. Log scale chart.
Other stocks with similar patterns to Cantex include Wesdome Gold Mines (WDO.TO) and Gran Columbia Gold (GCM.TO). Both of these stocks have moved back to the prior high, but haven’t consolidated as much yet.
The price recently broke above resistance at $2.50. It is now consolidating below $2.66. Volume is already elevated above normal. While the price could break higher and run, volume and volatility will likely need to settle down before another meaningful move to the upside can occur (see May and June). Strong sales growth and the company is expected to move into profitability this year.
The average volume is 220K. Log scale chart.
Final Word on Trading Price Spike Stocks
When a stock moves to the watchlist that doesn’t mean it will develop a trade soon, or that it will develop a trade at all. In order to enter a trade, it must meet your trigger parameters and have a solid reward:risk ratio.
Also, if swing trading, note there are several mining stocks on the list. You only need to trade one. If you trade more, split your typical position size between two or three stocks. If you trade three stocks with the same pattern (and full position sizes) you have tripled your risk because they will all likely move together. You also triple your potential your reward, but most traders who last a long time consider risk first instead of fanciful notions of a big payday.
Also, many Canadian stocks tend to be lower volume. Consider that before making a purchase.