China New Borun Corporation (BORN) popped 130% on heavy volume Tuesday and set a new 52 week high. BORN seems to be following in the footsteps of VisionChina Media Inc. (VISN) which has seen a rise of 559% in the last month.
Every few years, low float Chinese stocks are targeted by day traders as momentum buys. Shorts are squeezed and we see large spikes. These stocks are easy to manipulate and one big buyer can push a stock way up and then day traders jump in regardless of what the company produces or earns.
The best way to trade these momentum stocks is to buy when they break through the high of the day after a pullback. Also, when a stock pauses for a day or two and then breaks back up through it's previous 52 week high on heavy volume, chances are it's ready to pop again. These stocks are high risk so always keep a tight stop! They are not good long term investments, some will go bankrupt.
China New Borun Corporation (BORN) resistance levels - $3.23, $3.52, $4.
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