When will the next hot streak begin?

What's up, everyone? All right, in
today's episode, I'm going to break down
the price action in the market today.
Right now, we've got a stock that is
squeezing higher, so we've got a little
bit of volatility. We've got energy
stocks are moving up a little bit. Crude
oil crossed over $100 a barrel today, so
you know, that's sending some of these
small cap energy stocks a little bit
higher. And you know, there was a time
in the past when uh the price of oil
would go up and all these small cap
energy stocks would explode. They'd go
up like 200, 300, 400% and that stopped
happening. That didn't happen this year.
When earlier in the year, oil had this
big move up at the beginning of the
conflict in Iran, we didn't see a surge
in small cap energy stocks, which was
surprising. We didn't see a surge in
solar stocks, you know, or renewable
energy stocks. It just kind of didn't
trickle down, which was a bit of a
divergence. Typically, you have the
price of energy going up and these
alternative energy companies also
increase or even the local domestic
energy companies that are still oil or
gas go up. But that wasn't the case this
year. So today, as we saw a few of these
energy stocks starting to squeeze, I
knew better and I said, "Nah, I'm not
going to set my expectations that this
is really going to do anything that
special." So let's go ahead and jump on
the screen share and start breaking it
down for today. We'll begin with a look
at crude oil. So, um this is um oil
futures here on ThinkorSwim, so you
could see uh the price of energy
rallying back up. If I switch this um
let's see. So, we're on uh 5-minute
chart right here. So, I'm going to
switch this to the daily. You can see
that we had this peak at 119
uh way back here. This is earlier in the
year, then we pulled back, we rallied
back up, we pulled back. And so, in
context, yes, we're coming back up, um
but is this a place where, you know,
crazy things are happening? No, not
really. So, when we had TPET starting to
squeeze up, Trio Petroleum, US fossil
fuel company, I just sort of knew this
could be thickly traded. Probably not
going to work.
On the one hand, you look at the chart
and you think, well, jeez, it's
basically right off the all-time lows.
It's a recent reverse split. It's a 4.4
million share float. You know, all of
that kind of lends itself to potentially
having a bounce. And yet, these energy
stocks haven't tended to give us these
bounces. If we look at the daily chart,
we switch to auto here for the scaling.
This is earlier in the year here on
T-Pet. So, we go back a little bit.
Let's look at MXC. So, MXC, this is back
in 2022
when we had a surge in energy. And this
ended up going from about $10 a share to
$40 a share. INDO, Indonesian energy.
This one ends up doing an even bigger
move from $4 to $88. Unbelievable
squeeze.
You know, and I guess that was just kind
of a once
I don't know, like what kind of
once-in-a-lifetime kind of thing that
happened with those stocks.
You could see how energy peaked there on
the United States Oil Fund. And arguably
is, you know, I mean, not arguably, it
is much higher now, but there's that
divergence. Whereas energy has gone
higher, these stocks have not followed.
They've really not been tradeable. So,
yeah, so although there's been a couple
of different energy stocks that popped
up today, SkyQ was another one, SUNE
yesterday, Sun Energy. I really I didn't
trade them. I set I had low expectations
for it. DBGI hitting the scanner right
there. This one tends to pop. It popped
up last week from about four to eight
and then ended up closing the day red.
In fact, yesterday, TNON ends up popping
in the premarket session as you probably
know from my recap. And then it roll
does a double top, rolls over, and ends
up closing the day red as well. So, it
sells off hard. And the thing that's
interesting about TNON is that this
company filed a prospectus just
uh this week
giving them the right to sell 1.8
million shares. And so, it's kind of
funny because on the one hand, they have
this news headline that, "Hey, we've
repaid a convertible note um of
approximately 5.16 million." So, they
repaid a convertible note, that's great.
And then they're turning around and
saying, "But also, we're going to sell
more shares to raise money." And so,
when I saw those two headlines, um you
know, I they kind of cancel each other
out. And so, yesterday, yeah, it pops up
then it sells off, but then it squeezes
back up. And so, as it's rallying back
up here, what I kind of said is, you
know,
on the one hand, you could say that this
is sort of a bottoming tail, and now
we're getting like a hammer uh this is
like a huge candle sort of on like a
hourly chart, where you've got the
bottoming tail form there, and that is
bullish because although it sold off,
we're rallying back up. That's showing
strength. And you've got a lot of volume
right in here.
On the other hand, given the fact that
they are likely going to be selling more
shares, that's going to negatively
affect the float. Float's going to be
increasing, and all of that selling, if
it's right on the open market, will
suppress the price, and that's going to
prevent it from making a move much
higher. So, this ends up being basically
an inverted head and shoulders pattern
um as of right now. It's broken a little
bit higher, but I just don't know what's
realistic to expect. So, I didn't, you
know, step out and um you know, put my
um
money on the line on this trade.
In fact, as you can see right here, I
have no trades in my main account, and I
have no trades in my small account
today.
Um I didn't take any trades today. I
just
I just wasn't feeling it. TIAN ON
leading gainer, but thinly traded,
wasn't confident. I sort of felt like
the best I'm going to get on this is
maybe 10 or 15 cents a share. And while
that is definitely base hit trading,
what I've also realized is that I don't
usually capture the most of what the
potential is. So, if the potential is 20
cents, I typically would probably only
capture like half of that at best, which
is only 10 cents. So, when I was looking
at this and I was thinking the best case
is 10, 15, maybe 20 cents, then
realistically, I might only get 5 or 10
cents. Now, if I try to do that with,
you know, 40 or 50,000 shares, I might
get a couple cents of slippage on the
entry, a couple cents of slippage on the
exit. So, now 5 cents of slippage on a
trade that only had It just doesn't It
just doesn't work. And then to take that
same trade with 2 or 3,000 shares and
make you know, 60 or 90 bucks, kind of
doesn't really feel worth it for where
I'm at, uh, you know, on the year right
now or even just in the last 90 days up
1.5 million.
You know, when the market's really hot,
you know, these are $100,000 days. These
are big green days. And when it's cold
like this, I sort of have a choice where
I can either reduce my size
significantly and just chip away really
small trades, or I sit on the sidelines
and I kind of preserve that
uh that actual capital, conserve it
until, you know, save it for when the
market's actually stronger. And also
conserve the mental capital. Because,
you know, inevitably, sometimes you end
up jumping in one of these that never
really had that much potential. You take
maybe a little too much size, and then
next thing you know, you're down five,
seven, eight thousand dollars. And if
you remember last week, I ended up going
red on, uh, I think it was Tuesday and
Wednesday, five grand and then eight
thousand. And I was like, you know, that
was totally unnecessary. None of those
trades really had that much potential,
but sure enough, I managed to, you know,
take a loss on them. So, I'm trying to
be a little bit better this week about,
um, you know, not jumping in stocks like
that that really probably don't, uh,
that I feel don't have that much
potential, because it's just It feels
like it's just not worth it.
So, uh, yeah, I've traded less this
week, but, um, you know,
I've got the capital in my account. I'm
ready to jump on, uh, jump out there,
but I'm just waiting for something that
feels a little bit safer. We also had
DFNS that popped up earlier today
briefly.
Wins a $1.3 million power generation
order, but that amount of money is
relatively small compared to the size of
the company, and so it's not material
enough to send the stock up, you know,
much more than as you could see here, 5%
so it's a bit of a smaller move on that
one and you know, so right now we're
kind of in the trenches and when it's
you know, when it comes to the question
of when will this market turn around and
what will it look like? There's a couple
different scenarios. One is you got a
stock like TNON that just kind of keeps
grinding and next thing you know, it's
at 550 and then six, 657, 758 and
eventually there's capitulation points
where shorts give up, they cover, longs
give into FOMO and jump in and the thing
starts really moving quickly. It you
know, just keeps going. That could
happen with TNON. I think because the
context specifically for this company is
that the company's most likely selling
shares that will
adversely affect its ability to have
that kind of squeeze.
But
the beginning or or sort of the shift
from cold to hot can be
one stock giving us just a sort of
surprise move. It's grinding, it doesn't
drop and then just finally you know,
pulls away and shorts give up and longs
jump in. Another scenario is you have a
stock that legitimately has news that is
so good even short sellers are like I
better not short this. And so you know,
that could be something like you know, a
big investor like you know, Elon Musk
takes a majority stake in a company. You
know, that's like something like that
would be probably quite a a really big
headline
for a small cap stock.
Um
maybe
Excuse me. Thinking about biotech
stocks. Maybe a biotech stock that um
has like you know,
I don't know,
a really good clinical trial result
um
that that could work
um
maybe um
maybe a company having a partnership
with a really big company like an Amazon
or an Nvidia or something like that,
SpaceX. Depending on the details of
that. But if there was some kind of
headline that was so strong that you
read it and you're like, this is just
clearly a buy, then longs jump in,
shorts get nervous, and then that could
create a really big move.
Okay, so that's another scenario. Um and
then the third scenario, I suppose,
would be So, the first scenario is a
stock just kind of keeps grinding higher
then finally pulls away. The second is
the if a catalyst is so strong, everyone
just jumps in it right away. Um
and I suppose the third would be that
you have a stock that is
um you know,
uh is somehow controlled by insiders.
And this can happen with foreign listed
securities that the float is so small
and insiders own it for pennies on the
dollar that they can they really can
control the price. And so they start
pushing it higher. And as they push it
higher, shorts realize there's not a lot
of inventory of shares available to
borrow, so they really can't short it.
It goes higher higher and higher, and
next thing you know, shorts are getting
just completely squeezed. And the
underlying catalyst may not be clear. It
may not even have news. It's a foreign
listed security, but it's like, why is
this thing going up? And then that
starts the next round of momentum where
other foreign listed securities are sort
of um traders dump on them in hopes that
they do something similar.
And that's becomes a bit of a
self-fulfilling prophecy cuz now they're
jumping on stocks and shorts are scared,
and then they just start moving more and
more.
So, those are kind of three different
scenarios of how um the cold market
could start to um you know give way to
some more opportunities.
And sometimes we'll see as it starts to
warm up that we'll have some
opportunities on one day and then it's
totally dead on another day. So, it's
kind of like hot cold hot cold
you know that type of thing
and and so that's not uncommon either.
Anyway, so
I at this point I'm going to just hold
tight and I'll be back at it first thing
tomorrow morning. We'll try to finish
off the week Friday with you know
hopefully a couple of trades but it
wouldn't shock me if we finish the week
kind of slowly since you know it's a
Friday and I don't expect
a big news catalyst to come out on a
Friday. So, that means you know probably
scenario one and two are out definitely
scenario two. Scenario three is a no
news situation so that could happen on a
Friday and scenario one of a stock that
just kind of keeps grinding higher could
happen on a Friday except that typically
you would expect that there's a catalyst
behind the initial move higher and I
just don't know that we have a good
chance of seeing that. So, this week may
end up being a bit of a wash but you
know on the other hand I feel really
fortunate because we've had a really
good stretch in the last you know well
this this year really and certainly the
last few months and so if we just have
to kind of you know sit tight for a
little bit I could do that and then you
know jump right back out and be back on
the field once we start having some good
action again. So, this is an important
time to study up so you're prepared for
when things start to pick up again. All
right, with that I'll remind you as
always that trading is risky and my
results aren't typical so please manage
your risk take it slow and I'll see you
back at it first thing tomorrow morning
streaming at 7:00 a.m.