There were some heavy hitters involved when President Donald Trump announced $250 billion in economic deals with China this week, including Boeing Co BA 0.55%, General Electric Co. GE 0.22%and QUALCOMM, Inc. QCOM 0.92%. But while none of the big name stocks the president mentioned are moving much this week, one under-the-radar Chinese stock is on fire.
Traders won’t find China Recycling Energy Corp CREG 5% among the companies mentioned in Trump’s speech, but the stock is up an incredible 395 percent since Wednesday. Without any fundamental news from the company, traders are left to speculate about whether or not the company may have been involved in some way with the U.S. cooperation package.
Be Careful
Ironically, the entire move may have simply been triggered by pure speculation.
Stocks with extremely low floats can be extremely volatile if just one or two buyers step in with speculative bets. The lack of liquidity can trigger a large move, which then catches the attention of other traders, who compound the move by piling into the stock. With limited shares available to borrow, it can be difficult or impossible for short sellers to come in an even out the trade, leaving the stock at the mercy of limited supply and massive short-term demand.
ON Friday alone, more than 20 million shares traded compared to the stock’s average 30-day volume of just 925,000 shares.
If there’s no underlying fundamental news driving the move, these huge spikes don’t tend…
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