+300% Short Squeeze on "Wild Card Friday"

AI Summary

Transcript

What's up, everyone? All right, in
today's episode, I'm going to walk you
through the leading gainers in the
market this morning. I'm going to share
with you my trades. We have a stock that
squeezed up over 200% in the pre-market
session. That's the stock that I made
the most on, but I waited to break the
ice on it. I didn't jump in at the
beginning. I traded it kind of at the
very top of the move once it was finally
moving and pulling away. We'll talk
about that. will also break down one of
the popular setups that have been
trading in the last month or so, which
is a curl into a double top. But you got
to be careful because if you buy too
high, you're getting in right at that
double top, which is resistance. And
then you get we've been seeing big
rejections off those levels. The first
trade of the day for me was buying a
curl into that double top, but it didn't
extend further to the double top. It
ended up reversing and rejecting before
it even got there, and I was red on that
trade. So, that was a little bit of a
bummer. I'm also going to walk you
through my outlook here for the rest of
the session this morning, today, and
what I'm looking at going into next
week. So, let's go ahead and jump on the
screen share. We've got AM OD. This is
squeezing up this morning, as you can
see, up over 200%. It's got over 100
million shares of volume. This is the
leading gainer in the market. It's a
stock that I made the most on, and it's
a move that began yesterday. Now, part
of me felt like the move beginning
yesterday was a little tricky. It had
about 16 million shares of volume in the
after hours session yesterday. And the
reason that I felt like it was a little
bit tricky was that I kind of feel like
if the news was really genuinely
so good, it would have gone up just 200%
right away. It wouldn't have waited,
right? It would have just, you know,
pulled away. So obviously in the after
hours session yesterday um you know it
moved from $1.15 up to $1.50 then it
pulled back then it kind of rallied up
here later in the evening up to a1 um80
90 and then to $2 then it pulls back
again and so it kind of closes here um
obviously up quite a bit in the after
hours session but nothing extraordinary.
Now maybe that that is in part because
the sentiment in the market has been a
little softer. traders haven't been as
confident to jump on things that are
moving. And so it might not have been
just that the catalyst was the issue,
but that sentiment was the issue. In
fact, I would argue that the same exact
catalyst on the same exact company in
two different markets will create much a
different response from market
participants. In a colder market, that
same headline might fall on deaf ears.
No one's really interested. In a hot
market, that same headline, the stock
could go up 200%. And that is very
confusing as a beginner trader because
you're thinking to yourself, it's the
same stock. It's the same headline. Why
did this work so well 6 months ago?
Sometimes we even see companies recycle
more or less the same headline. And so
one time it makes a big move and then
another time it fails or the first time
it fails and then the second time they
recycle the exact same headline and the
stock rips up. What's different? It's
the sentiment in the market. And right
now the pendulum has swung to being to
the cold side. So the market is colder
right now. Short sellers are more
aggressive. Long biased traders like
myself are sitting on the sidelines. I'm
sitting on the sidelines. All of my
trades today were with onetenth of my
position size I would take in a hot
market. So even though I'm participating
a little bit, it's with such small size,
it's sort of negligible. You multiply
that sentiment across millions of
traders around the world and there's
less volume participating in these
moves. But then when the pendulum swings
the other way, back to the hands of the
bulls and a hot market, everyone's back
to trading with full size, being super
aggressive. Shorts are being
conservative, and that's when we see
these big moves. But as we've talked
about, one of the problems is that when
the market is really hot, there are
companies that absolutely take
advantage. They put out headlines that
they know traders are going to buy into,
and then what do they do? They dump
stock on the open market. And it is
legal. They are allowed to do that as
long as they've made the disclosures
that they are planning to raise capital
by selling shares and they do that
through a shelf registration. Now many
companies have a shelf registration and
when their stock is up a lot they could
sell. Now would a big company like you
know I don't know Meta or Tesla sell
into the open market? Probably not. But
they c they could if they wanted to. In
fact Google raised quite a lot of money
uh was it earlier this year for AI data
center stuff. So you know even big
companies can sell shares if they feel
that the price at the market is high
enough that it could support or sustain
that kind of selling. So unfortunately
what that means is that during the hot
market we'll have a lot of stocks that
squeeze up and they keep going but then
you start getting a few of these stocks
that take advantage and they crush
traders because as soon as the news of
the offering comes out the stock
plummets. you get this big drop. And so
unfortunately that then creates more
confidence on the short side and it
creates fear among long biased traders.
And as the fear sets in, the long bias
traders become more and more and more
conservative. They don't want to touch
anything and then this the pendulum
swings to the hands of the shorts. But
then on the other side, the shorts get
so aggressive on everything during a
really cold market that they'll short
something that actually genuinely is
pretty strong and uhoh, you get a big
squeeze. Holy smokes. Look at as we
speak. It just squeezed up to now up
289% on the day. It is halted up on a
circuit breaker. And so imagine if
you've been shorting this since after
hours yesterday, thinking this is just
another one of these companies that's
probably not going to hold up. It's
going to reverse. I'm just going to add
more tomorrow. You add more, you add
more. Right in this area, as I was
watching it, I was looking at this and I
was thinking, well, geez, we've got this
ascending resistance trend line right
through here. It's hitting resistance.
Then it kind of gets above it, but
barely back below it, back above it.
Then it moves nicely here. A nice 5m
minute setup. Another five minute setup.
And another little setup here. Although
this one wasn't as strong, but it still
went. So now shorts are getting squeezed
a little bit on this. Now, it's not the
most epic short squeeze we've ever seen,
but it's not a bad move. Thank goodness
John is in the chat room walking our
members through the price action on
this. So, John is my first student,
first member warrior trading to ever
earn a million-doll badge. And he now
provides market commentary when I stop
trading each morning. So, that gives you
guys more time to get commentary from a
seasoned trader, which is nice. And so,
I'm sure he's walking people through the
price action on AMOD. By the way, if you
want to tune into my commentary or or
listen to John or be in the chat room
and use the software, there's a link to
the twoe trial pinned at the top of the
comments and in the description. So, how
did I trade AMOD? Well, before we get
into my trades on AMOD, let's also look
briefly at AIXI, which is up 67%. So,
this is a pretty big move as well. This
one has done something very interesting,
and we're going to talk about this
pattern. So, let's jump onto the
whiteboard here. And what I want to talk
about is an interesting pattern that
we've been seeing in the market. It's a
curl
uh to a double top. Curl to a double
top. That's the pattern we've been
seeing. So what happens is that a stock
typically comes out with breaking news
and immediately squeezes up. The problem
is, as you know, getting in something
moving this quickly is very difficult.
And if you end up chasing it and you buy
it up here, well, suddenly it pulls back
and then next thing you know has dropped
way back down. In fact, it looks like a
full round trip and you're like, "This
is a terrible setup. It's no good."
However, what we've been seeing on a
number of these is that they begin to
base out a little bit right here. They
pull back, whatever. Two candles, that's
fine. And then it starts to break out
and it actually ends up coming all the
way back up to the double top. And so it
comes right back to where it was. We've
seen so many of these setups. And the
problem is this is the begin. This is a
double top. And a cup and handle
formation is when you get a little
pullback here and then it pushes through
right here to a new high a day. And
that's a bull flag just underneath the
high. That's a cup and handle. But a cup
and handle is not always the result of a
double top. What can happen when you get
a double top is boop, you end up coming
back down and that's it. So then where's
your trade in here? Well, the only safe
entry is actually right down here for
the curl. So it's a curling setup. This
is a setup that I teach in the Warrior
Pro curriculum, the curling pattern into
a double top, ideally a cup and handle,
and then an extension higher. So look at
AIXi. This one gave us that curl. So
initially it pops up as you could see
right here. This is going to be um let
me switch to let's see uh the one minute
chart here. So initially AIXI pops up
and this was not a a like a a fast curl.
This took a long time. So initially it
pops up, goes up to 160, pulls back,
goes up to 170, 175, 180, flushes down,
tries to get back up, drops down, and
pretty much traders forgot about it. It
was like, yeah, this thing is dead. It's
not going to work. Then it kind of curls
back up above VWAP, sells off again,
curls back up, and this time it broke
through that level and squeezes up to
190. I called it out. I said, you know,
this is a good-look setup. John
mentioned it, too. A couple other
members mentioned it, and I said, you
know what, for me, I'm not going to
trade it because it's too cheap. I like
the idea, but from here to here in terms
of profit is only about 20 cents a
share. I just don't feel like that's
enough for me. So I was being a little
bit of a, you know, primadana and I
said, "This isn't enough for me. I need
a bigger move." Whatever. So I don't
trade it. Okay, it goes without me.
That's fine. It's going to happen. Pulls
back, pops back up, pulls back, and then
look at this. Another curl back up. But
this time, we broke through the double
top and we extended. Now, that's
something you're going to see a little
bit more in hot markets is the break
through the double top. Let's look at a
mix. AMIX is another setup. This is one
that was more similar to that chart.
initially squeezes up, then round trip
all the way back down. And then it
rallies back up, a little pullback, and
it pushes back to the double top. Then
it comes back down, comes back up,
rejects again, comes back down, tries to
curl up again, can't get through the new
high, and rejects. This is not my
favorite pattern. I'm going to be
honest, it's not. Um, this is this is
like a very cold market pattern because
you get a huge rejection on high volume
selling and then you get a curl, right?
So that's the setup right there. TNMG.
Let's look at this one. So TNMG, same
kind of thing. Popped up earlier this
morning right here. So pops up, sells
off, curl back to the double top,
sideways, sideways, sells off, pops up
to VWAP, pulls back, fails, then comes
back up again to the double top. Does it
pull away? No, it can't pull away. Then
it sells off. TN, this is the one that I
traded this morning and I lost on this.
Pops up, pulls back, pops up, pulls
back, pops up, pulls back, pops up,
pulls back, pops up, pulls back. I
jumped in right here for this. No, I'm
sorry. I'm sorry. I'm sorry. Um, I was
watching it right here. I didn't get in
because I looked at this and I said,
there's not enough profit. I'm not
taking that trade. It sells off, comes
back down, comes back up right here,
comes back down. This is where I got in
right here, but I got in a little high
at 61. It goes up to 70, only 10 cents,
flushes back down, and I'm red. Took
10,000 shares, lost $1,17,948,
11 a share, doesn't matter. Whatever.
So, I stopped out of that, ends up kind
of going sideways, coming back down. And
then we had AMOD. Now, AMOD has now
squeezed up to just about 300% on the
day. That's impressive. resumed from the
halt flat, sold off to about four,
bounced off, came back up. Now we've got
a topping tail. A little bit risky up
here. Look at the volume profile though.
Higher highest volume for the most part
is on green candles with only a couple
of exceptions here and here. So this um
so we had this initial uh resistance
line right here that I had drawn. So
that created resistance in this area.
We're down below it. Then we come back
up above it. And right up here, I
started watching it and I said, you
know, right here, I'm interested.
I think I should buy it right here. And
then I said, wait a gosh darn second.
The MAC D is negative. Don't take that
trade. And I said, you're right. The
MACD is negative. It's a good
observation. However, look at this
5minute bull flag. It's a nice looking
bull flag. It's right around the 9 EMA.
I don't know. But I said, nope. The one
minute doesn't correspond. Don't take
the trade. I didn't take the trade. Ends
up going up to 350. Gosh darn it. It
dips down. It pops back up. It dips back
down. So, now it's getting a little
tricky. I took a trade right here at the
open for the break through this level.
And I got in a little bit high. It
popped up. It dipped down. And then it
curled up here, tapped four. I jumped in
and out. And I locked up 18 cents a
share. Uh, no, actually a little bit
less than that. So here, let me show you
my P&L. So I'm only up $700 today. I
don't have a lot of profit, but I'm
happy that it's a green day, $1,800, but
on a 20,000 share position. So about 10
cents a share. That was it. And this was
sort of the whole problem with this
stock right along was that I felt I
wasn't going to be able to get a lot in
terms of cents per share. So I would
need to be able to have bigger share
size. The problem with bigger share size
is if you do mist time it, you're going
to get smoked and you're going to have
fees and commissions on top of that. So,
was this the most impressive trade for
me? Not really. The stock for the most
part was grinding. I missed a good
section of it. Um, but I got a little
trade there at the open and then once we
got that pop up and started to drop, I
was like, "All right, that's enough of
that for me. Switch gears. Time for the
recap." So, anyways, now we've got a
high of 480, which is good. The fact is,
you'll never get the bottom and you'll
never get the exact top. If somewhere in
this move there's a setup that you see,
you can identify and you could pick up
10 or 15 cents, then you've done a
pretty good job. In a hot market, you're
going to pick up a lot of those trades.
But in a cold market, it is slim
pickings. So, this is going to be a red
week for me. I was red on Monday, no
trades on Tuesday, red on Wednesday,
Thursday, and now small green on Friday.
So, it's a red week, and it is what it
is. I wish I hadn't taken such a big
loss on Monday. I wish that the market
had been stronger. There had been more
opportunities, but wishing doesn't
change anything. It is what it is. So, I
have to just accept that this is the
current reality that the market is still
colder. What I can do is I can control
how I approach it. I can choose to be
aggressive. I could choose to keep
trading with huge share size and
probably keep losing or I can throttle
back. And I've done a good job
throttling back except for Monday, the
rest of this week, Tuesday through
Friday. Uh, and at this point I'm kind
of just batting down the hatches,
reducing my share size and waiting until
things improve. That has consistently
been the best approach. Now, some are
going to say, Ross, why don't you just
short these stocks? You know, look at
this. You've got these rejections at the
double top. Why don't you just start
shorting the double double top? So,
here's been always, you know, my concern
with shorting these types of moves. the
risk of getting one of those explosive
squeezes where suddenly we have a stock
that just goes absolutely bananas. So,
this here was um XHG from earlier uh in
the summer or at the end of the summer.
This went from a dollar a share to $18
in one one minute candle. It was in less
than 5 minutes. It's unbelievable, 1800%
squeeze. And if you're in the practice
of trading the way I am, and you get
better and better, and you're taking
bigger and bigger share size, my average
share size is 20,000, 50,000 shares on a
cheap stock like that, 100,000 shares.
100,000 shares going 18 points against
you, that would be a $1.8 million loss.
I mean, that's pretty that's pretty
scary. The fact is, if I didn't have the
cash in my account to support holding, I
would have gotten marketed out by my
broker somewhere in the middle of that
spike. And it might have been for a
$500,000 loss. Maybe it' be for
$700,000. Maybe by the time I'm out,
it's for a million half dollars. And
they say, "Ross, you owe us this money."
And so what that tells me is that if I
was going to trade to the short side, I
have to be thinking about my max loss
being potentially much much much greater
than what my max loss has ever been
trading to the long side.
So now I have to reduce my share size
considerably to account for that. So
instead of trading with a max of 100,000
shares, what's the most I'd be willing
to lose on 20 points? 10,000 shares.
That's 200,000 bucks. I don't think I
want to lose 200,000. No, I've lost
200,000 trading to the long side. So
maybe maybe 200 is the most. So then I'm
I'm capped at 10,000 shares. And so now
the question is how long would I be able
to, you know, produce profits before
that inevitable big loss because it just
it happens from time to time. Now, it's
not to say it doesn't happen trading the
long side. Losses happen and sometimes
they're bigger than you'd like. However,
with the with trading the long side,
when it's hot, I'm really able to
exponentially scale my profits and then
it cools off and I slow down. I reduce
my size so the loss gets smaller and
then I go for another big streak.
Trading the short side, I wouldn't be
able to have that exponential curve in
profitability unless I was willing to
increase my share size, increase my
risk. But because you always have that
risk of the potential 20 point instant
squeeze, I I I couldn't possibly feel
comfortable um taking that kind of share
size. So in other words, I feel like my
profitability trading the short side
would be capped by my risk tolerance,
which is a reasonable um you know, type
of cap to apply to your trading, whether
you're trading the long side or the
short side. Either way, it's a good cap
to have um based on risk. But my feeling
uh you know could I do a small account
challenge at some point where I trade
only to the short side? Well, that's
going to be a challenge as well because
if you notice a lot of these stocks and
I'll give you this one for instance,
AIXI, it requires 500% leverage to short
it margin. Which means if you want to
short $10,000 worth, you need $50,000 in
your account. So, if I traded with a
th000 or $2,000 account, I wouldn't be
able to put the full 2,000 into a short
position on a lot of these stocks. I'd
only be able to put in like, you know,
$500 or $400.
So, now you factor all of this in and it
starts to feel like a bit of an uphill
battle. Why don't you also factor in the
fact that you have to pay to borrow a
lot of these stocks? Now, some of them,
well, that one's not even available.
AMOD, let's see what the cost to borrow
this one is. Now, the cost to borrow
will fluctuate. And it's not, it's
again, it's not to say that it couldn't
work for other people, and it certainly
does. Um, I see a number of reasons why
it wouldn't work for me as well. Cost to
borrow right now is 25 cents a share.
So, if I want to borrow even a,000
shares, it's going to cost 250 bucks.
So, that's 25 cents a share just gone to
the broker. The fees and commissions to
the broker just to borrow that position,
even if I don't take any trades on it.
And so now I've got to make 25 cents a
share just to get back to break even.
And now if it doesn't it feel like
you're kind of fighting um against the
current by by trying to uh make that
work. Uh and yet in a in a market as
cold as we've had this week um you know
traders are asking you know why don't
you just flip short? You know why why
fight the battle? Just trade the
direction that's easier. And I you know
I hear I hear that feedback. Um, and I'm
I'm not entirely against it, but I think
the amount that I would make is because
of the cap I'm putting on myself is
marginal, which means I'm still risking
with a,000 shares up to $20,000 loss.
But with a,000 shares, how much would I
make if I shorted every day for a month?
And you know, with a,000 share
positions,
I mean, I guess I guess I would say $500
a day, you know, would probably be a
pretty good day. 50 cents a share. Um,
so 500 a day, that's $2,500 a week with
no red days. So let's call $2,000 a
week. So it's $8,000 a month. Just kind
of doing the math here roughly, you
know, ballpark back of the napkin. So
$8,000 a month. Um, and then in one
trade I could give back 16, you know,
$20,000. That'd be two months of
progress. Two and a half months of
progress in one loss. So that's where
you start to see those P&Ls where
someone's chipping away, chipping away,
chipping away, chipping away, two and a
half months, and then they're back to
zero. How demoralizing is that? H, it's
the worst. I mean, it that that's
something that is really hard to recover
from. Now, when you have the move like
you had in the case of um XHG
is what could you have done to prevent
that?
Oh, I'm I'm not going to short anything
that's Chinese. Well, half of the stocks
have been rejecting so nicely if you
want to for from the short perspective
have been Chinese, right? Oh, I'm not
going to trade anything with a with a
low float. This one had a 46 million
share float. It wasn't a low float. Um,
you know, so then you I don't know. you
know, this is this is the uh this is the
the the the mental game and this is part
of creating a trading strategy. These
are all the things you have to think
about. What is your edge going to be?
What's your profit loss ratio going to
be? What's your what's the risk you're
taking on these trades? And does it
pencil out? And so for me, anytime I've
done this analysis, I felt that it
generally didn't really pencil out that
well. um you know, so
doesn't mean I couldn't try it, but I
kind of think I know where it's going.
Um so that's kind of my that those are
my thoughts. Feel free to share your
thoughts in the comments below. Um we're
going into the weekend here. So got the
weekend to think it over and we'll be
back at it on Monday morning and hope
that on Monday we have some better price
action. You know, hope is not a
strategy, of course. Um, if I looked
historically, the market always is
cyclical in these es and flows. So,
we're in a low cycle right now. And, you
know, we don't know how long it's going
to stay slow, but we know they don't
last forever. And so, right now, I just
got to kind of wait it out. And, you
know, look, a day like today, a small
green day, you could argue I shouldn't
have even bothered trading. Didn't
really make that much, but still had the
risk of losing. Yesterday, I was red.
Probably shouldn't have even bothered
trading. Um, but on the other hand, if
you just eternally keep yourself on the
bench, it can be really hard to get back
off the bench. So, sometimes it's um
it's good to be out there. And, you
know, some days some days in in the
market um you know, are kind of just um
I don't know, they're kind of just like
practice days. They're not days where
you're going to make a meaningful amount
of money, but you're going through the
motions. you know, you're taking the
trades and uh you're trading with small
size, so the amount you'd make or lose
is negligible. Um but you're keeping
yourself warmed up and then you have
other days where it's like, all right,
this is decent. This is a good day. Th
this is like good good price action.
It's not a record-breaker. It's nothing
I'm going to write home about. And then
every now and then you have a day that's
like, wow, that just might have been my
best day of the whole year. And I don't
know yet, but it might have been. And if
I look back at my trades from this year,
um, you know, we I'm sure we could go
back and say, "Whoa, look at that." So,
as of right now, that was your best day
of the year. Did you know it in the
moment? Probably not. You know, at that
point, you were just like, "That was a
solid day." I don't know. It's early in
the year. Might still end up uh breaking
that record. Uh, you know, it's hard to
say, but um yeah, I mean, I think it's
important to show up every day. And
although you might sit on the sidelines
a little bit, uh if there's really
nothing that's decent, uh being active
and trading with small size is generally
probably better than no trades at all.
And it's good to exercise that restraint
to show up and trade and keep that extra
buying power for when actually things
are picking up. So with that, I want to
thank you guys for tuning in. Make sure
you check out the link for the twoe
trial. This whole time I've been doing
the recap, John's been streaming,
walking you guys through the market
commentary for those who are members. So
check out the twoe trial. I think you'll
really enjoy it. But I'll remind you as
always that trading is risky. The
hardest part is the slow periods, the
red days, the red weeks. And it happens.
That's part of the deal. So you don't
get the good without the bad. And right
now you're seeing uh that side of the
coin. So thank you for tuning in. Please
manage your risk by practicing a
simulator before putting real money on
the line. And I'll see you back at it
bright and early on Monday morning.