+986% Short Squeeze for Day 32!

Welcome to day 32 of my small account
challenge of growing a $2,000 account
using Charles Schwab as my broker.
Today, we had a stock that squeezed up
nearly 1,000%
and what was incredible is that the
stock made the majority of the move in
just one candle, one one-minute candle.
That's unbelievable.
How does that even happen? Well, I have
a theory and I'm going to share it with
you during today's recap. When I was
getting dressed this morning, I put on
my green shirt cuz I said, "I need some
good luck to start the week." Those of
you guys who were tuning in for my
recaps on Friday, Friday was a small
green day in my small account and it was
a huge red day in my big account, the
biggest red day of the year. And so, I
had to make a decision coming into
Monday morning what I would do. I knew
that I needed to try to make some
progress at recouping some of that loss
in my main account, but that I did not
want to risk having a subsequent big red
day. You have one red day, that's bad
enough. You don't want to have two,
three, four red days in a row. And part
of me thought, you know,
maybe I'll just focus on the small
account this week and just put my big
account on the shelf and kind of forget
about it for a few days and let the dust
settle.
And then on the other hand, I thought,
you know, that's kind of like falling
off a horse and then putting the horse
in the barn for a week and not getting
back on. It's better to get back on the
horse and just not let it become a big
thing where you just carry this fear and
emotion. So, I said, "You know what? I'm
actually going to put the small account
on the shelf and trade just in my main
account." Well, this morning, we ended
up having a couple of stocks that made
huge moves and one of them I was able to
trade so well that it made back nearly
all of Friday's loss just on a couple of
trades on that stock this morning in my
main account. So, once I done that, then
I figured, well, maybe I'll break the
ice in the small account today as well,
and I did, and that's what we're going
to be breaking down during today's
recap. So, here we are. It's day 32. We
have now raised, by the way, over
$442,000
for charity. I donated to two additional
children's hospitals today, which means
we've donated to 42
out of the 50 children's hospitals
across the United States that I had
wanted to donate to. The goal of
donating to one in every single state.
And thank you guys who have been hitting
the thumbs up on the episodes in the
series, because every time you do, I add
an extra dollar to how much I'm
donating. So, today's day 32, and our
leading gainer,
uh I had traded it in my main account,
but not in the small account. Just Not
because it wasn't suitable for the small
account, it certainly was. I just was
trying to focus on building a cushion in
the main account, and one of the things
that I have struggled with a little bit
is
um when I trade the same stock in both
accounts at the same time,
you know, I sort of have different risk
tolerances, and usually, if the market's
really strong, I'll just be green in
both accounts, it doesn't really matter.
But, when things start to get a little
tricky, that starts to become difficult,
and it was tricky on Friday. And since I
didn't want to have a repeat of Friday,
I decided to just begin this morning by
just focusing on the main account,
building my cushion, and going from
there. So, this was JWELL, J W E Well,
and you can see this nice move. This was
our leading gainer, which I didn't trade
in the small account, but a nice move
from $1.50 up to $5.24. It pulls back,
it comes back up, it pulls back. We get
a really nice breakout here, a squeeze
up to about $6. It pulls back, comes
back up to six, ends up being a double
top, pulls back a little bit more. Okay.
So, that kind of set the stage today. We
had a stock that made a pretty big move.
It was the leading percentage gainer, as
you can see right here, up over 178% at
$4.31.
50 plus million shares of volume, 2
million share float. It's a Chinese
stock with no news. That's been the
theme in the current market that we're
in.
Okay. So, then at about 9:00 a.m. we had
SCKT
hit our scanners. Uh priced at about 53
cents a share and squeezing up on news.
Now, to be honest, I just thought, well,
it's another distraction stock. I don't
like trading these cheaper penny stocks.
I don't usually do well in them. You
know, in order to make good money, you
got to buy
a lot of shares, but when these stocks
are trading below $1 a share, one of the
problems with them is that
unfortunately, they trade down to the
1/100 of a penny. So, I just turned on
my whiteboard camera. So, let me show
you what I mean by that. So,
a stock at 90 cents could trade like
this. 90 by you might think 91. Well,
not quite, because it trades down that's
trading down to the 10th of a penny.
Um
or sorry, down this is just to the
penny. This is the 10th of a penny. This
is the 100th of a penny. So, actually,
they could trade like this. And you take
away the 91 and it's .002.
Now, this would be kind of ridiculous to
have a spread um that tight. It could
happen, but what's very common is that
you'll trade um you know, something like
1 0 by um
9, you know, 2 5 or something like that.
And so, if you bought 10,000 shares, you
need this thing to make $1,000 to go all
the way up to $1 a share. And so, how
many price increments is that? Well, it
See, this is the thing. It's actually
1,000 price increments for it to go all
the way from 90 cents to a dollar a
share. The 100th of a penny times 10
cents is 1,000 increments. Whereas, for
a stock to go from a dollar to a dollar
10 is only 1 2 3 4 5 6 7 8 9 10 cuz it's
only 10 cents. Once a stock trades over
a dollar, the lowest spread is a dollar.
So, a dollar
Sorry. Uh what am I doing? One $1 $1
right here by a dollar 01. And that's
the tightest spread you can have once
the stock is over a dollar. So, it when
I saw SCTT squeezing up, the thing that
I thought to myself is, "Yeah, it's
interesting if it can hold over a
dollar." Now, what often happens with
these stocks is they squeeze up to a
dollar a share and then they get really
heavy as a lot of penny stock traders
just put an order to sell it at $1, just
a even round number. And so, when it
came up here, it first squeezes from 40
cents up to 70, pulls back, nice micro
pullback. No complaints there, but I
didn't trade it. It goes without me
because I thought it was too cheap all
the way to a dollar and 15 cents. Little
topping tail candle there, it drops back
down to 95 cents, and it gets back up to
a dollar, and I had my order ready to
add if we broke over a dollar and 10
cents looking for the squeeze to a
dollar 15 because what I know is that
once these are holding over a dollar,
they can get interesting. However, what
I also know is that as stocks like this
are squeezing up, you know, 100% 200%
300%, these are huge moves. A lot of
short sellers are shorting as it's
squeezing up
waiting for it to roll over. And so, the
more it goes up, the more they add, the
more they add, and they're not expecting
it to break over a dollar because it
doesn't usually happen. And so, what
made this a little bit different was
that we actually had breaking news.
Socket Mobile partners with 3 I
technologies to expand industrial
mobility solutions for Apple-based
frontline operations. Uh-oh, keyword
Apple. All right, US tech company. And
so, what ends up happening is it breaks
a dollar, goes to a dollar 15, dollar
20, dollar 40, dollar 60, 80, $2, 240,
260, $3, 350, all the way up to a high
of nearly $4 a share. How does that
happen? It happens when a short is auto
liquidated. So, what created this move
essentially were marketable buy orders.
Buy, buy, buy, buy, buy, buy, buy. Just
going through
back-to-back-to-back-to-back-to-back-to-back.
Now, in the market, you can't send an
order for more than 10% above the
current price. So, you couldn't just do
a 1 million share order
for $4 a share and it would just go all
the way up until it order filled and
then in the price maybe comes back down.
So, it was uh back-to-back orders that
kept pushing the stock higher. And I
would suspect that there's a trader
somewhere in here that was adding,
adding, adding, adding, adding short,
adding, adding, adding, adding, adding
short, and then most likely maybe they
did it on leverage, doesn't matter.
Suddenly, it breaks over a dollar 15,
dollar 20, and right around here to
dollar 50, their broker auto liquidates,
starts pressing the buy button for them.
It the the broker has taken over the
account to minimize the damage. What
ultimately happened is the broker in a
way maximized the damage by buying at
the market what ended up being over a
million shares of volume. And so, there
have been cases where
traders have tried to sue their broker
for saying, "You got me out at, you
know, $3 a share. That's preposterous."
And the broker says, "Look, we had to
manage our risk. We didn't know what the
stock was going to do. They had news. It
could have gone to 15 or $20 a share. We
got you out. It's a margin call. You owe
us the money. That's your problem. You
should have managed your risk better."
And at the end of the day, the broker's
right. And so, it drops back down
because once it makes that big squeeze,
there's no real buyers other than that
one person who was buying at the ask.
So, it comes all the way back down here
to $1.40.
As it starts to curl back up, I added
right down here in my main account, and
then I said, "You know what? I'm going
to take this trade in the small account.
I actually kind of like what this thing
is doing." And so, I got a trade right
through here in both my main account and
my small account. We ended up coming
back up. I was getting really close to
punching it up here for it to squeeze
back through three, wondering if maybe
we got to move higher. We didn't. It
rolled over. That was the high of day. I
locked up $2,925.50.
Not bad at all. A total of 22 orders
between buying and selling with 160
fills. And you know what? I'm grateful
to be green. So, now the account is up
to $68,000,
a little over that. We've raised another
$10,000 for charity between Yes, uh
let's see, Friday's episode and today's
episode. So, we're just continuing to
make progress. I'm excited, and I'll be
back at it bright and early tomorrow
morning for day 33. So, for those of you
guys that haven't already checked out
our 2-week trial here at Warrior
Trading, there's a link pinned at the
top of the comments and in the
description. Come on over and check it
out. It's 2 weeks for 20 bucks. You get
to use the same software I'm using every
single day. That's Day Trade Dash, which
uh I'll just put up right here. So, this
is for charting, scanning, breaking
news. Plus, you'll have access to my
chat room and my live broadcast while
I'm trading, where you can look over my
shoulder and see when I'm getting in,
when I'm getting out. And you'll also
have access to a selection of classes
from our Warrior Pro curriculum. So, I
hope you guys check it out. And but I'll
remind you, as always, trading is risky,
and my results are not typical. There is
no guarantee you'll find success whether
you trade with me or you learn on your
own. So, please manage your risk and
practice in a simulator before you ever
put real money on the line. With that,
I'll see you guys bright and early
tomorrow morning at 7:00 a.m. Eastern
Standard Time.