Trading Idea: Dryships (DRYS)

There's been some pretty ugly price action going on the last week in the markets. Can't be for certain that this continues to trend downwards but after looking at some stocks, one looks like a decent buy and that is DryShips (DRYS).

Lets look at a weekly chart shall we? What we got here is a nice uptrending stock that has spiked and then pulled back hard. I would feel that there is some support here in the $5.85. However, due to the volatility of this stock, it is more suitable for a daytrading play.

Here is where the fine line between daytrading, position trading, and investing come into play. On deep pullbacks, you have to be a nuthead to hold onto a full position in a stock like this. Its better to reduce your risk by taking the time element out of it by daytrading high momo issues that tank.

If you are a daring position trader, you could trade this by scaling in with the full 100% of your allocated funds, closing your eyes and praying to the almight stock gods, then reducing it to 50% if you feel its worth an overnight hold. However, I would rarely hold onto a tanking stock in full with the intent of carrying the full position forward.

A further look at the chart, I see some resistance at the $7.15 area from early April. That should be a guideline to lighten the position if the stock jumps.