We just have TWO stocks go up over 1,000% 🤯

AI Summary

Transcript

What's up, everyone? All right, in
today's episode, we're going to talk
about how it is even possible that it's
only Tuesday and yet we've already had
two stocks this week that have gone up
over 1,000%. Typically, when this
happens, I would say we're in a very hot
market. [music]
But I don't know if that's really the
case here. Something is going on and
we've got to dial in, figure out exactly
what it is.
And so, let's begin by talking about the
common denominators between these two
stocks. We had one yesterday and one
today. So, we jump on the screen share
and start breaking it down. Yesterday,
we had ZYBT.
ZYBT, if we back this up on our 5-minute
chart, we can look at this. You can see
this stock, it's a it's a unbelievable
move. I mean, these charts are just
insane. So, it's down at 60 cents a
share and it rallies all the way up to
90 cents, up to a dollar, up to a dollar
20. Boom, it's up 100%. Then it goes up
to a dollar 40, dollar 50, up to $2. It
pulls back for a moment here, then it
surges up to 250. Now, it's up 200%.
Goes up to three, up to 360, 300%. It
pulls back, it squeezes up to four, 450.
Now, we're up over 500%, 600%. And after
hours, it was halted into the close and
it resumed and squeezed up to 1150,
stopping out short sellers, only to
flush all the way down to $2.50.
That's an 80% drop right there in less
than 10 minutes.
Wow, that is a roller coaster. Okay, so
what was the catalyst? This stock must
have had some incredible news, right?
Surely it did. Surely it did not. There
was no news.
So, that's the first common denominator.
All right, so the profile of this stock
yesterday,
it's a Chinese company with absolutely
no news. The company even put out a
headline commenting on the unusual
trading activity. Their headline
basically said that they are not aware
of any material non-public information
regarding the company, its business,
financial condition, or operations that
would account for the recent increase in
trading activity in its securities.
So, in other words, they're just
shrugging their shoulders. They were
just we have no idea. We don't know.
It's a 5.6 million share float and all
of a sudden, yesterday it traded on over
of volume. Chinese stock with no news.
Today, CPHI,
a Chinese stock with no news, goes from
less than a dollar a share, 50-60 cents,
very similar to the other, goes up to
two, pulls back, goes up to three to
four, pulls back, goes up to five to
six, pulls back, goes all the way up to
a high of nearly $20 a share. I mean,
this one was was even more insane. I
mean, this is absolutely ridiculous.
2,212%
move.
Wow.
No news, Chinese stock. And again, the
company comments and says, "We don't
know. Shrugging our shoulders. We have
no idea why our stock is up 2,000% at
the peak today."
So, how is this even possible?
What's going on here?
All right. Well, let's think about this
for a second. Number one, we know that
the market has been fairly warm. July
has been a little slower than June. June
was the best month of the year so far
for me. So, the market really did heat
up in June. July, it's been a little
cooler, but still we've been seeing some
big moves here and there. It's kind of
like one day's hot, the next day's cold.
One day's hot, next day's cold. Now,
this week we've had kind of two hot days
in a row. So,
I think what's going on here
is that there are a lot of traders that
are in the market. They're looking for
opportunities, but both long and short.
Now, last week, we did have a few stocks
that gave us some pretty big rejections.
And actually, we had a pretty big
rejection just on
on Monday. Look at this one. So, this
stock squeezed up here,
rallied up,
reversed, came all the way back down,
ends up being, you know, red on the day.
Just on the week now, this thing is down
off of off of the high. So, let's just
look at this. It's down like 90% from
its high up here around $10, down at,
you know, a dollar a share. So, there
are traders in the market that are
momentum traders looking for a trend
that's beginning, looking to jump on
that momentum as early as possible and
ride that wave as long as you can.
That's the type of trader I am. I'm a
momentum trader. And then you have
reversal traders, counter trend traders,
traders who buy stocks that are really
weak,
and traders who short stocks that are
really strong. Shorting stocks that are
really strong is risky business. And
this is, I think, the exact reason why
these made such big moves. Because,
think about it. You have a stock that's
up 100%, 150%. Logic is telling you it's
not going to hold these levels. Of
course, it's not going to hold these
levels. There's no news. It's a Chinese
stock. We've seen this story before.
They pop up, they pop up, they squeeze,
and then they dump. They give it all
back. And sometimes these stocks are
part of WhatsApp campaigns where people
are, you know, messaging everyone saying
you should buy the stock, you should buy
the stock. It's essentially a pump and
dump. And we don't know. I have no idea.
I don't know if anyone's been sending
WhatsApp messages on these stocks.
But because that has happened many times
in the past with Chinese stocks, there's
a lot of traders out there that think,
you know what? Anytime a Chinese stock
is going up, I'm going to look to trade
it to the short side. I'm just going to
start adding as it squeezes higher. So,
essentially, it gets up to 100% on the
day, and as it's up 100%, I'm going to
short 1,000 shares. So, 1,000 shares
short at $2. It goes to $3. I'm going to
add another 1,000 shares. Goes to $4.
All right, now it's going against me.
I'm going to add another 1,000 shares.
It goes to $5. Surely this will be the
top. I'm going to add now 4,000 shares.
I'm going to bring up my cost basis, and
here I think it's going to roll over.
And then it goes to 650 to 7, and
they're like, "Oh my god.
What do I do? Do I keep adding? Well, I
should keep adding because now it's even
more extended. The reversal will be even
bigger." But now to get your cost basis
that much higher, now you've got to add
like 8,000 shares. So, now all of a
sudden you've got, you know, whatever,
15,000 shares, some big position. And
then it goes to 10 to 12 to 14. You
double again. Now you take another
15,000 shares, and you got 30,000
shares.
It's against you by 10 points. You're
down 300 grand. All from a 1,000 share
starting position. That's insane. It's
terrible risk management. And yet the
problem is, and this is this is why I
don't like countertrend trading. The
problem is the more extended it gets,
the the more you justify to yourself why
this would be the worst place to cover
because you know this is the most
extended it's ever been.
It's going to reverse.
But can you continue to hold while it
gets more extended?
And most people cannot.
And so the result then is when people
are now flipping to cover that position,
and they have to buy 30,000 shares on
the open market, right? You buy Well,
whatever, 30,000 shares are even a
bigger position, and you're doing that
in between halts as it squeezing higher
and higher and higher. And so what you
notice was very common when they start
halting like this
is that as it squeezes higher, the
volume actually declines. The liquidity
declines. So, yes, you get this really
big move, and it was easy to add big
size in here and in here and in here.
But now it's hard to get out because,
you know, there just aren't as many
people willing to buy it up here as a
sort of organic long bias trader. The
majority of people buying are shorts who
are covering. And yes, you've got people
who are selling and taking profit, but
you have a decline in volume as the
price goes higher, which means it's
harder to get out without slippage. And
so all of a sudden, you know, a few
really big short sellers with a couple
hundred thousand shares are easily
pushing this higher as they're covering
and using market orders. Now, something
that I think is really interesting is
that
a popular short selling broker
actually made an announcement and they
said, "If you're short this, you should
cover right away. Um this is very
risky." And
uh I thought that that was really
interesting that they said that. Um
because they they basically were
uh
it almost seemed like an admission that
there were some traders at the firm who
were heavily short. And the you know,
all of a sudden
it So, let's just play this out. How
many of you guys saw INHD from um a few
It was like a month ago or so. So, INHD
I have to take it off that chart. Um
So, this stock ended up squeezing up on
the daily. You can see here.
It makes this huge move, squeezes up, um
goes absolutely parabolic in one day. I
thought it went higher than this, but it
goes It shows a high of $43 a share. And
that was on um June 8th. And then it got
halted.
And it got halted on a T-12 halt. So,
that that type of halt is pending the
company providing more information to
the exchanges. And the stock will remain
halted until the company provides the
information that's being requested. So,
now a month has gone by.
The problem is if you were holding a
position on this, you cannot sell it.
Now, if you're long and you're in it,
you're just stuck.
And you know, it's an unfortunate
situation to be in. Nobody wants to be
in that situation, but
the halt was in the afternoon, and if
you were holding in the afternoon, and
now you've been holding it for over a
month.
But, if you were short,
you're also still holding it. Okay, no
big deal, right? Well, it is a big deal
because every single day you continue to
pay borrowing fees.
So, the borrowing fees on this stock
were really high. So, you're now
potentially paying hundreds of dollars,
maybe thousands of dollars per day in
borrowing fees. What if you can't afford
to pay them anymore?
Then all of a sudden your broker is
essentially, you know, you're the broker
is the one that ends up holding the bag.
They might try to collect from you, but
if they can't collect from you, then,
you know, they're in a jam. So, when a
broker is saying, "Hey, don't short this
stock. This stock has, you know, is very
risky. It has a risk of being halted on
T12 halt." Which, arguably, both this
one today and the one from yesterday
both had the risk of getting a T12 halt.
Um both of them were up over 1,000% with
no news.
And if you would shorted it, and you got
caught holding it,
then you have to pay borrowing fees
every single day until it resumes. You
don't want to do that for a month. So,
essentially, they were like, "If you're
thinking about shorting this, think
again. Get out. We don't We really don't
want anyone at the firm shorting it
because then you're It's just going to
be a a problem. You just don't do it."
So, now
as it's They're telling you that as it's
squeezing higher. So, that's two things.
It's a signal to long biased traders
that maybe there are some shorts that
are in a jam here.
And number two, that you'd have to be
crazy to think about shorting these
because of the risk of holding it and
having to pay borrowing fees every
single day. So, now the only people
selling are people that already own the
stock, not people who are short selling.
I mean, again, there'll be exceptions.
There'll be some people who take the
high risk short. And as you can see here
on ZYBT, if you got it at 11 back down
to three, you did great. But if you
started down here at two or three, and
you kept adding and adding and adding,
right in here as it squeezed to 10 or 11
was pretty scary. And it wouldn't shock
me if there were some people that panic
and covered here thinking, "Look, I've
seen these go to $28, $38, $48, $50 a
share. We've seen some go up over $100 a
share." You will blow up your account.
You could end your career. And so, the
reason I don't like short selling, I
mean, there's a number of reasons, but
one of the reasons, number one, I don't
like having to deal with cost to borrow
and paying locate fees. Number two, I
don't like dealing with short sale
restriction and having to short on an
uptick. Number three, I don't like
counter trading counter trend trading
because the more extended they get, even
when I'm red on my position, I just feel
like it makes even more sense to add,
and it's really hard for me to go
against the logic and get out of a
position when it feels like it's going
to reverse even harder. And so, that has
created stubbornness in me, where I've
taken some really big losses shorting,
but also buying weak stocks because I
don't cut my losses quickly enough.
Whereas for momentum trading, I don't
have to and trading on the long side, I
don't have to worry about the short sale
restriction, I don't have to worry about
cost to borrow, and I can just get in on
a pullback and ride the momentum.
I don't have to try to predict a
reversal. When the reversal happens,
it's very clear and I get out of my
position. So, so yesterday we had ZYBT,
no new stock. Today we had CPHI, no new
stock.
Well, what are we going to have
tomorrow?
Um and here's uh here's the deal. I
didn't trade I took no trades today. I
didn't trade in my small account. I
didn't trade either of these stocks um
yesterday or today in my big account.
ZYBT, I didn't trade yesterday. I didn't
trade CPHI today. Um mostly because
these moves started below a dollar, and
I typically find that when stocks start
below a dollar, usually they're
choppier. These were exceptions. They
did end up making big moves, but they
also occurred kind of in the middle of
the day, which is not when I'm typically
trading. And one of the reasons is I
don't like dealing with halts. Um you
know, I used to be okay with it and I
used to trade a lot of halts. Um but in
the last couple years, I found that the
momentum is a bit cleaner when you don't
have to get caught up waiting 5 minutes
on a halt or maybe 10 minutes or longer.
The problem with these halts is
sometimes they halt high and then open
low. Sometimes, you know, they they halt
down and then they open higher. It just
there's a degree of kind of
unpredictability and you're just sort of
a a bit vulnerable when you're stuck in
a halt. So,
anyways, I didn't trade either of these
myself.
Um
And interestingly, on the one hand, if
these moves had occurred during
pre-market or after hours, you wouldn't
have had the halt levels, so they could
have made a bigger move, but I think the
fact that they occurred during regular
trading hours made maybe it feel safer
for shorts to add. And so they kind of
fell into this trap. They got squeezed
two days in a row, which is which is
pretty bad. Um so, and interestingly,
both the charts look kind of similar.
CPHI squeezes up, comes back down, and
then does another rally from $8 here up
to 16. That's a nice move. That's
actually probably an even cleaner move,
even though it's on slightly lighter
volume. ZYBT sort of similarly had the
initial big squeeze right here, pulls
back, pops up, pulls back, and then
pre-market goes from three back up to
nine. So, I almost wondered if this was
going to be in play today if it could
get back over five and six, but it it
wasn't able to do that, so we didn't get
uh I didn't get any trades on it.
You know, my feeling is we've known for
a long time that
Chinese stocks can give us these really
big moves. Um this is nothing new. I
mean, I've got an entire chapter of my
Warrior Pro curriculum dedicated
specifically to Chinese stocks because
this is not
I mean, it's just not uncommon. We've
seen this kind of stuff happen a lot.
And
so it's one of the reasons that I
I I will trade these Chinese stocks. I'm
just going to grab a screenshot of it.
Um but I generally say I'm going to
approach them with caution and for I
think the logical reason that um
they can be unpredictable. You can have
what seems like a really nice move and
then all of a sudden you're getting like
this massive flush where it drops, you
know, like that. Those types of candles
are very scary. You do not want to be in
a stock doing something like that. Um
and usually when a stock shows the
potential to make those kind of moves or
have that kind of drop, I just say, "You
know what? I can't trust it because it's
just not worth it. I just don't want to
take the risk, um you know, and and take
the the loss that could come with um you
know, with with trading this type of
thing." So
um pre-market I'm a bit more inclined to
break the ice on them. And yes, trading
a Chinese stock with no news is
certainly risky. I'm going to um
you know, I'm I'm going to disclaim that
as always, but
uh it's not a requirement for a stock to
have news. Yes, it's part of my five
pillars of stock selection. So when a
stock doesn't meet that fifth pillar,
then I approach it with a bit more
caution, but it's not my uh feeling that
I should just disregard it entirely
because we have had enough times where
you know, you've had a no news stock
like this that goes up, you know, 4 or
500% or whatever the case is, 1,000% and
it seems that it would be silly to say,
"Oh, I'm never trading something if it
has no news." You'd be missing a lot of
uh opportunity. So
you know, tomorrow
on the one hand, I would say, "Yeah, I
guess we should probably look for a
Chinese stock with no news. That's the
theme." But
gosh, I don't know. It feels uh
it feels pretty strange to disregard a
stock that potentially has genuinely
good news because instead we'd rather
trade a Chinese stock with no news.
That's kind of a backwards market. Uh
but
you know, so I I don't know how you feel
about that. Uh but if I see something
moving and it's clearly got momentum
during the window that I'm trading, then
you know, I'll I'll break the ice. I'll
give it a try. But um
I I'm I'm going to just have to be a
little bit cautious. One thing I would
also say is that sometimes after
um you know, two or three uh
uh you know, trades sort of back-to-back
like this, traders start to think,
"Okay, I know the theme." So, the next
Chinese stock that pops up, they're like
all in on it. Um this is a Chinese one.
And they're like, "Oh, I'm going you
know, I'm going to load the boat on
this." And then then that's when you
catch this massive rejection. You know,
like this I don't know. Whatever. Maybe
the company was in on it. The company's
like, "Oh, we are going to dump shares
to these stupid retail traders, these
you know, whatever."
And so then you get burned. So, you got
to be a little careful. Um you can't
just assume that every Chinese stock is
going to make this move.
Obviously, the ones that are making the
move um the the company
doesn't appear to be selling. Otherwise,
I don't think the stock would be able to
sustain those levels. I mean, they're
not selling in a very meaningful way at
least.
So, other company other uh Chinese
stocks, the the company could be selling
very aggressively as soon as it pops up.
And so then that would suppress its
ability to move higher. Any longs that
jump in are buying from the insider
selling, and then volume stalls out. All
the long bias traders try to dump. No
one's buying, and panic ensues, and you
get this massive flush. So, you have to
definitely be careful about that cuz
that's a a real risk uh tomorrow and I'm
sure probably for the rest of the week.
So, my game plan uh for premarket
tomorrow is to take it easy, watch to
see what's obvious. I will say we also
had a stock at like 9:15 this morning
that did have news
which I
kind of was a little peeved about
because it was like 10:00 past 9:00 and
I was like, all right guys, I don't
think it's happening. And then like 2
minutes later, this stock VIBK pops up
and goes up 300% right here. Now, this
was legitimately on breaking news
a $40 million AI headline. So, this one
I just missed and I am bummed that I
missed it.
But, I
thought the day was over and I just
didn't I didn't think that we were going
to get any breaking news headlines and I
was not interested in trading a no news
China stock. So,
missed that one, but
gave you a nice first pullback, second
pullback, big rejection at the third
pullback right there. So, something to
pay attention to. But, in any case,
by the end of the day it did give back
quite a lot of its gains. So,
that's fine. But, I'll be back at it
first thing tomorrow morning and if you
want to watch over my shoulder as I'm
trading, the link for our 2-week trial
is going to be pinned at the top of the
comments and in the description. So, you
can check out the 2-week trial and
during that trial watch as I'm trading,
but also use the same software that I'm
using every single day for charting,
scanning, and breaking news. So, I hope
you guys check it out. 2 weeks for 20
bucks, you're going to get a ton of
value out of it. So, I will be streaming
tomorrow morning 7:00 a.m. and I hope to
see you there.
Reminder, by the way, as always, trading
is risky and my results aren't typical.
So, please take it slow and always
manage your risk before putting real
money online. And with that, I will see
you guys bright and early tomorrow
morning.