I know it seems a little odd to see a Finviz Scan for Over Extended and Potential Breakout Penny Stocks all in one. If you think about it, an over extended stock and a stock continuing to make new highs are one in the same.
When searching for over extended stocks, you’re basically looking for anything that’s up in price way more than you think it should be. If you’ve ever shorted a stock, you know that the price can sometimes continue going higher.
Beware of the short squeeze. This is where a bunch of short sellers pile into a trade anticipating the price will drop rapidly. If the price goes up instead of down, all of the short sellers are stuck in a losing trade.
If the price advances even higher, more and more short sellers will exit the trade using market orders just to get out. When a short sell trade goes against you, the broker can call in the shares at their discretion.
Short sellers may find their positions forcefully closed out without consent if the trade starts going bad. This happens when a stock reaches extreme levels of volatility. When a broker calls in the shares, you’re probably toast anyways.
When playing the long side, a broker normally won’t close out the trade until your account runs out of money. A general rule for investing is to diversify your funds so one bad trade can’t take you out of the game.
Over Extended Potential Penny Breakout
Proceed to Finviz.com, click on Screener and select the following variables.
Next sort by Change.
This scan shows all stocks that are under $5.00, up in price more than 5% since the open and have liquidity (volume). If these stocks continue to trade 500,000+ shares per day, they should be fairly easy to get in and out of.
My Finviz Scan for Over Extended and Potential Breakout Stocks should provide you with a nice list of the strongest stocks leading in to the next trading day.
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