On Wednesday, the Death Line in the S&P 500 was breached, and since then stocks have been tumbling fast and hard. For example, the Dow Jones Industrials is going through its worst losing streak in 8 years (six straight weeks of closing in the red).
As for me, I started the week up $7K but found a way to give it all back and finish flat.
As frustrating as that is, I’m going to spend the weekend reviewing my trades and try to tighten up areas where I see holes in my game.
We either win or learn… no excuses here.
In fact, there is plenty of good take going into next week.
For example, one thing we’re finding out is stocks with active catalysts are trading utterly opposite of the market. And if you look at yesterday’s top movers… they were all catalyst driven momentum stocks.
And despite not hitting any of these yesterday… I’m going to stick to stocks that have the potential to return 5-15% in a few days… because that is where the money’s at. And what has helped me reach over $300K in trading profits this year.
That said, I want to talk to you about a trade that I feel has even more enormous profit potential. This trade is different from my typical multi-day swing trades.
You see, instead of aiming for 5-15% in a few days… I’m shooting for +20% returns… and my holding period gets stretched out to a few weeks (not days).
I sent my latest catalyst swing trade alert to clients yesterday. And while most stocks in the market were down yesterday… this microcap stock wasn’t.
Catalyst Swing Trade Alert
I’m back with another catalyst swing trade alert.
This one is actually a “green” stock… it’s looking to save the planet and the climate.
Now, when we think about climate and energy, everyone immediately thinks… “Hey, maybe we could use solar or wind to power our cities…”
Well, what about water?
Imagine if we were able to extract energy from something that covers 70% of the earth…
Ocean Power President and CEO George H. Kirby has this vision.
The Future of Energy?
Ocean Power wants to develop a very cool idea of generating electricity from ocean waves.
By using a buoy that would convert the energy in ocean waves into electricity. They call it the PowerBuoy and it will provide energy to remote offshore users who don’t have easy access to conventional electricity sources.
The PowerBuoy product has been developed and improved over the years and is now on the verge of getting traction in the market by not only the government, but also by leading oil and gas operators.
Have a look at this video and you will understand how innovative this product is…
As in every new product development company, Ocean Power has invested a lot in research and development over the years.
These investments require a lot of cash and at the beginning of this year, they were in urgent need of cash as they only had around $2M in their account whereas their quarterly costs sum up to around $3M.
Therefore, it was quite logical for the company to exploit its stock price pop on April 3 by offering new shares. In total, this offering raised around $15M. This will be enough to fund their operations into 2020.
Some oil majors are keen on being involved in the development of sustainable energy sources and are teaming up with Ocean Power.
Recently, a major European oil producer teamed up to evaluate the productivity and reliability of the PowerBuoy in the Adriatic Sea. The outcome since they started testing in November 2018, is promising.
Now, OPTT could bounce shortly due to numerous catalysts on the table. Additionally, OPTT’s product is becoming more and more recognized in the market. Here’s a look at some potential catalyst in OPTT.
Ocean Power Technology (OPTT) Catalysts
Remember, this is a catalyst swing alert, so I’m looking at potential events that could send this stock higher, as well as the chart.
Now, here are some catalyst events we’re watching for in OPTT.
1) New feasibility study in The Gulf of Mexico
On April 3, OPTT announced an agreement with a gas and oil production company (they didn’t want to disclose the name) to complete a 12-week paid feasibility study that will examine the use of OPT’s products and services in monitoring subsea wells during decommissioning activities.
Ocean Power Technologies President and CEO noted, “This study will evaluate the use of our PowerBuoys in monitoring multiple customer wells during oil field decommissioning activities in the very deep and challenging waters of the Gulf of Mexico…”
He added, “We believe our solutions will reduce the cost of our customer’s operations and will also increase safety and improve operational flexibility by providing an unmanned, autonomous power and communications platform. Feasibility studies are an excellent way for us to apply our solutions as the first step toward deploying our products within customer operations. We will leverage our many years of experience with marine systems and deployment services to analyze the installation and operation of OPT’s solutions in this very challenging application. More often oil and gas operators are coming to OPT to tap our expertise and solutions to tackle tough problems. I am proud that we have been selected for this study, and we look forward to working closely with this customer”.
A look at the Twitter account of the CEO shows you that he takes every opportunity to share news on feasibility studies when available e.g. launching the buoy, first results.
2) Presentation at LD Micro conference
On June 4 at 4:20 pm, they will present at the 2-day LD Micro invitational conference for young growing companies. This will attract the attention of new investors in the days after the conference as information will be analyzed and potential positions could be taken.
3) New product prototypes
Ocean Power is in the process of developing two new products. One is the anchor-less PowerBuoy that they develop with the government and the other is in collaboration with NEC Energy Solutions to connect their buoy with lithium-ion batteries.
They plan to test the first prototypes of these products this summer. We will be looking for any news on the progress and collaboration around these products in the coming weeks.
Given that good news could come out shortly on feasibility studies, we think $2 represents an area of value. A first stop loss level can be placed at the $1.8 level that acted as support this week.
If good news hits the market, a first price target would be $3.5 which is the exercise price of the warrants offered in April.
Now, looking at the historical price action, a spike towards the $6 level would not surprise us!
If you like trading penny stocks and are looking for an edge in the market… check out Penny Pro Jeff Williams’ webinar on building small accounts.
[Ed. Note: Jason Bond runs
JasonBondPicks.com and is a swing trader of small-cap stocks. In 2015 he earned a 180% return on his money. Then in 2016 he turned a $100,000 account into $430,000! Discover How He Did It]
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