Forget the Sony (SNE) Playstation 5 and Microsoft (MSFT) Xbox Series X -- the Corsair (CRSR) explosion is the #1 story in gaming -- at least for traders.
In fact, Corsair just became Strategic Swing Trader’s #2 Play in November with a 56% gain in 7 days.*
*We nailed a 59% gain in CYH, but it’s not as fun a story!
Corsair came on my radar on November 10 when a subscriber asked me what I thought of the stock. I was not crazy about the chart, but I kept an eye on it.
On November 12, Corsair put in a narrow range bar, which made me think it could be on the verge of a Daily Breakout.
So on Monday, November 17, Corsair went in the Strategic Swing Trader newsletter as a Long Trade with the following parameters:
- Entry: $29.51 (just over Friday’s high)
- Stop: $27.49
- Target: TBD
- Strategy: Daily Breakout
Corsair hit the $29.51 entry price before 10 a.m. that Monday, so we were triggered long.
And immediately, it powered up big time. Let’s talk about why.
Corsair has a very sexy story as a pure play on the booming PC gaming and streaming market. Corsair a well-known gaming brand, but very few traders even knew it was publicly traded. The September IPO didn’t get much attention, but that was a positive -- the chart got us in before the stock was on Wall Street’s radar.
Also important to note: Corsair has a tiny float of 17.7 million shares, so even a small amount of buying could blast it into orbit. I would guess the Robinhooders of the world were bidding the stock up like mad.
After the initial pop, we had two surprise news events -- which is not uncommon when you nail the chart setup.
On Tuesday, November 17, Corsair CEO Andy Paul appeared on Jim Cramer’s Mad Money on CNBC. Corsair was already acting like a classic momentum fad stock, and Jim Cramer gave it a much bigger spotlight.
The stock just kept running and running higher. And then on Sunday, November 22, The Motley Fool came out bullish on Corsair, saying “the best is yet to come.”
Corsair rallied hard again on Monday after the Motley Fool story hit, reaching a fresh high of $43.89!
We took profit on the first half at $44.60 for a 51% profit.
Then, we exited the second half Wednesday at $47.60 for a 61% gain.
51% and 61% averages out to 56%
Now, why did we get out? Simple -- the stock was going climactic. The daily bars were growing so big that I was afraid of a flat out crash once momentum slowed. I did not want to risk giving back a 50%+ gain.
And over the next 2 days, Corsair did in fact crash 25% off the highs in 2 days, as you can see in this chart:
Let’s recap the 3 lessons you can learn from our #2 trade in November:
1) Do Not Trust a Hot Story Without a Technical Confirmation
Corsair’s story was picture perfect -- a hot PC gaming and streaming brand that 99% of traders never heard of. But the chart needed to set up before we bought.
2) When You Nail the Setup, the News Tends to Go Your Way
No one could have predicted we’d get assists from Jim Cramer and the Motley Fool. But when you get the setup right, the news tends to go your way.
3) Sometimes You Can’t Put a Hard Target on a Stock
It would have been hard to predict Corsair going from $29.51 to $45.69 in a week, but it was a hot story stock that’s exploding on social media. Names like this can run faster than you think.
Finally, I’ll issue 2 words of warning:
- If you are day trading Corsair, be very careful because even up here at $44+, it has a pretty wide spread and you can get chopped up easily.
- Thanksgiving week is always a tricky time for the market, and with low overall volumes, stocks like CRSR can really take you for a ride (up or down).
Take care! And if you want my next big swing idea, give Strategic Swing Trader a try!
Or you can check out our Black Friday deals.
