Winning Swing With Offerings

 

In case you do not know, a common stock offering (generally speaking) is when a company sells common shares at a discount to raise money – reducing the overall value of the company. You might hear some traders refer to it as toxic financing.

More often than not, there is usually pumping or some related event that brings the stock up before the offering is announced.

Most traders dump on news of offerings because they either want to lock in their profits or minimize losses. This is where you and I come in. We watch and wait for a 15% or more drop. When indicators show a reversal coming, we wait for the bounce into consolidation or wait for a base to form. Don’t try to find the bottom. If you need help and use TOS, you can use the PPS chart study to help confirm entry points. I like to use the MACD on e-trade. While waiting for this to happen check on a few things: 1. Are related stocks doing well (such as YVR running more or less with TKAT [also known as a sympathy play]) 2. Is the ticker in a hot sector like NFT or CRYPTO or WEED most recently and 3. Has it recovered well with previous offerings?

If you can tick all these boxes, then you are good to go. The majority of the time, the average stock will recover half of what it dropped. If it is in a hot sector, you will likely get a full recovery or more (especially so with positive PR afterward) within 24-72 hours. Your swing time will depend on previous offering recovery times, your patience and pain tolerance. Pick a realistic goal and do not swing for a homerun. And before I forget to mention this – this swing play works best on listed stocks. If you are not patient, this makes for a decent dip buy day trade as well.

 

Here is a summary of things to look for:

1. Company announces common stock offering

2. Price drops 15-30%

      a. Sympathy/Similar tickers doing well

      b. Hot sector

      c. Has recovered well with previous offerings (ideally they put out news after
          to give it a boost)

3. Base/consolidation forms

4. Jump in and wait.

 

Here is my most recent win using this play. I had tech issues, but the play worked well - check out the chart. Ticker made 110% gain from lows in just over 2 trading days. They put out offering news on Thursday 3/18 with a days low of $2.80. 'Recovery' went to $5.90 in pre-market on 3/23 after offering close was announced after-hours on 3/22.

$YVR trade by kimbra | Profit.ly

Here are some recent numbers to look over – some of these had great recoveries while others did not. The numbers below are absolute tops and bottoms. I encourage you to research a few of your own to see where your numbers land. My research showed an average recovery rate of 37% across 50 tickers that did some type of offerings over the last 12 months. And as you may well know the market was CRAZY!! in 2020 and still being loopy into 2021.

 

REMEMBER: It works until it doesn't!

 

TNXP - Offering 2/8 (1.54) price before offering news

11% drop on news

29.75% AVERAGE GAIN

2/8 - L $1.36 H $1.55 (13%)

2/9 - 24hr $1.79 (31%)

2/10 - 48hr $1.70 (25%)

2/11 - 72hr $2.04 (50%)

 

STAF - Offering 2/10 (1.12)

16% drop on news

34% average gain

2/10 - L $0.93 H $1.09 (17%)

2/11 - 24hr $1.42 (52%)

2/12 - 48hr $1.22 (31%)

2/16 - 72hr $1.28 (37%)

 

SYN - Offering 2/10 (1.09)

15% drop on maybe news

16.5% average gain

2/10 - L $.92 H $1.06 (15%)

2/11 - 24hr $1.13 (22%)

2/12 - 48hr $1.06 (15%)

2/16 - 72hr $1.05 (14%)

 

LKCO - Offering 2/11 (1.11)

15% drop on news

144.75% average gain

2/11 - L $0.94 H $1.21 (28%)

2/12 - 24hr $1.73 (84%)

2/16 - 48hr $3.86 (310%)

2/17 - 72hr $2.43 (158%)

 

LKCO - Offering 2/17 (3.00)

37% drop on 2nd offering news

34.75% average gain

2/17 - L $1.88 H $2.41 (28%)

2/18 - 24hr $2.77 (47%)

2/19 - 48hr $2.61 (38%)

2/22 - 72hr $2.37 (26%)

 

ALPP - offering 2/12 (8.10)

19% drop on news

15.5% average gain

2/12 - L $6.51 H $7.39 (13%)

2/16 - 24hr $8.04 (23%)

2/17 - 48hr $7.75 (19%)

2/18 - 72hr $7.01 (7%)

 

CFMS - Offering 2/12 (1.32)

18% drop on news

10% average gain

2/12 - L $1.07 H $1.16 (8%)

2/16 - 24hr $1.19 (11%)

2/17 - 48hr $1.19 (11%)

2/18 - 72hr $1.18 (10%)

 

SHIP - Offering 2/17 (2.26)

26% drop on news

3.25% average gain

2/17 - L $1.65 H $1.76 (6%)

2/18 - 24hr $1.71 (3%)

2/19 - 48hr $1.65 (0%)

2/22 - 72hr $1.72 (4%)

 

CTXR - Offering 2/17 (1.99)

30% drop on news

47.5% average gain

2/17 - L $1.39 H $1.58 (14%)

2/18 - 24hr $1.59 (14%)

2/19 - 48hr $2.15 (54%)

2/22 - 72hr $2.90 (108%)

 

EXPR - Offering 2/23 (2.47)

19% Drop on news

63.5% average gain

2/23 - L $2.00 H $2.52 (26%)

2/24 - 24hr $3.45 (72%)

2/25 - 48hr $3.97 (98%)

2/26 - 72hr $3.17 (58%)

 

CSCW - offering 2/23 ($0.912)

21% drop on news

43.75% average gain

2/23 - L $0.72 H $1.12 (55%)

2/24 - 24hr $1.04 (44%)

2/25 - 48hr $1.01 (40%)

2/26 - 72hr $0.984 (36%)

 

LKCO - offering 2/22 (2.28)

8% drop

3.86% average gain

2/22 - L$2.09 H$2.37 (13%)

2/23 - 24hr $2.02 (-3%)

2/24 - 48hr $2.20 (5%)

2/25 - 72hr $2.10 (0.47%)

 

NAKD - offering 2/25 (1.39)

20% drop

7.62% average gain

2/25 - L $1.11 H $1.31 (18%)

2/26 - 24hr $1.14 (2.7%)

3/01 - 48hr $1.13 (1.8%)

3/02 - 72hr $1.11 (0%)