OK, investors and traders, it is time for a little pep talk. Get up off the floor and wipe off all those tears. The headlines might be negative and stocks are losing value, but those traders attacking this market are making a killing.
Stop feeling sorry for yourself. Trading stocks in a market this volatile is like shooting fish in a barrel. In addition to writing for Investorplace.com, I write a newsletter focused on trading stocks of companies releasing earnings reports. It is a very niche product, but also lucrative for those following my advice.
This week alone, I offered four recommendations all on the long side of the market, including Newscorp, Kelly Services and Nvidia. All four of my picks were big winners. That is a remarkable accomplishment considering the fear and wild swings in stock prices.
In reality, it is not all that surprising. This volatility allows those trading stocks to make big money in a short period of time. If day trading did not have such a negative connotation, I would call it just that. Why wouldn’t you day trade when you can make 10% on one stock in one day?
Here are seven stocks with big swings to consider trading in this volatile market:
SodaStream International
This relatively new stock that specializes in home beverage systems has a big following of believers that pushed shares higher. Those dreams were crushed, at least for a day, as SodaStream International (NASDAQ:SODA) dropped by 40% at one point during trading Thursday. With the stock up 5% on Friday, this volatile stock is one to trade. I expect shares to recover that lost value as hype replaces fear.
Green Mountain Coffee Roasters
Green Mountain Coffee Roasters (NASDAQ:GMCR) is one of the hottest stocks in the country. It is one of the few names that trades for a higher value than it did before the overall stock market plunged. Shares are up a whopping 214% in 2011. Green Mountain was able to increase its value during the past two weeks thanks to a strong earnings report. Day traders can ride this stock higher as it’s likely clear sailing for the company between now and the next earnings report being released in approximately 3 months.
TravelCenters of America
Small-cap stocks offer the greatest opportunity for day traders to profit. TravelCenters of America (AMEX:TA) is an operator of truck stops and fueling centers across the United States. Shares of TravelCenters collapsed during the sell-off of the last two weeks. A strong earnings report helped push shares higher, but poor market sentiment kept the lid on gains. There is significant upside in this stock given the valuation compared to operating results. On up-moving days, trade this stock long.
Bank of America
Get on the right side of this banking trade and big profits can follow. Bank of America (NYSE:BAC) has been under attack from short sellers worried about the bank’s balance sheet. The company denies that it will need to raise capital to shore up its balance sheet. Those denials have done little to stop the bleeding. In the short term, while the debate rages on, shares are likely to swing wildly. Day traders can ride the waves on Bank of America as they come and go.
Tesoro Petroleum
Oil refiners do not like volatility. Profit margins already are thin, and crazy fluctuations in the price of crude make it difficult to reliably generate a profit. During the stock sell-off, oil prices have moved significantly lower. That sudden drop in price creates havoc for a stock like Tesoro Petroleum (NYSE:TSO). On days when oil prices fluctuate greatly, day traders can buy and sell Tesoro based on the direction of crude. When those moves in crude are big, so too will be the move in the stock.
Buffalo Wild Wings
Looking for a stock that dropped in value during the market collapse but is poised to rebound? Consider Buffalo Wild Wings (NASDAQ:BWLD). Day traders can ride this stock higher in confidence thanks to recent earnings reports in the casual dining space. Both Red Robin Gourmet Burger and Brinker moved smartly higher after reporting earnings. Buffalo Wild Wings missed estimates in its most recent quarter, but I would view the miss as temporary. This fast-growing company should find buyers especially in an up-moving market.
Apple
There are plenty of ways to play Apple (NASDAQ:AAPL). Day traders should simply look at the charts on this one. Over the past two years, the company rarely has broken the support of its 50-day moving average. When that support was broken, shares quickly moved to the 200-day moving average, then reversed course. Trading that pattern has been a reliable way to make money in this very popular and widely covered stock. Where are we today? Recent selling has Apple bouncing above the 50-day moving average. Given the strength of its last earnings report, it is unlikely to break that support. I would day trade this stock long until shares get sufficiently above the 50-day moving average.
