Not only do I push my students to be the best possible traders they can be…
There’s also a chance they get in tip-top shape.
You see, when you mess up, I don’t want you to berate yourself or drown in negative self-talk…
I demand you hit the floor and give me burpees.
Yesterday I heard something so silly…it required at least 575 burpees.
It all had to do with the crazy price action in the ticker symbol RXRX…which surged after the company announced a $50 million investment from Nvidia.
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The 575 Burpees Mistake
One of the most actively traded and biggest movers yesterday was the ticker symbol RXRX.
That’s because the company announced a collaboration and $50 million investment from Nvidia to accelerate its “groundbreaking” foundation models in AI-enabled discovery…
Now, if you’ve followed the market at all this year…then you know that Nvidia has been the hottest large-cap tech stock this year…
Many “experts” believe that its technology will play a significant role in the advancement of AI. And the company itself has boosted revenue projections moving forward.
Anytime a smaller company can associate itself with a larger, more established company, it legitimizes them.
That’s why I call the above news a LEGITIMIZER.
Naturally, the RXRX shares blasted higher in the pre-market.
Shares went from a low of $6.68 on Tuesday to a high of $18.94 in the pre-market.
There were two ways to play this.
The first, was to buy it right when the headline came out.
However, trading in the pre-market isn’t easy…and some traders would rather wait to see how the stock opens up before making a decision.
The second way to play it was to stay patient and wait for a dip…
The stock opened trading at $14.67 and spent the first-hour trading lower…
I saw an opportunity when it dipped at around $12ish…
I got in at $12.14 and quickly peeled out at $12.44…
It was kind of scary to be in it…that’s why I got in relatively small…and out quickly for a small profit.
One thing I saw circulating that made no sense was that traders were comparing CRBU to RXRX.
What Is A Sympathy Play?
A sympathy play refers to a stock or stocks piggybacking off another stock’s momentum because they are in a similar sector or have similar characteristics.
The idea is that sympathy stocks will move in the same direction.
For example, in 2020 when one meme stock performed strongly it would lift the others…
The same was true in 2021 when crypto stocks took off. If one had bullish news…then it also caused the others to spike.
This works for bullish and bearish news.
Generally, the stock with the main news will be more volatile than the sympathy stocks.
Why RXRX and CBRU Were Different
CBRU got positive news on July 6th, when it was announced that Pfizer bought a stake in the gene-editing company.
Shares also popped yesterday after an analyst gave it a $23 price target.
While the news in CBRU is also a legitimizer…
Its move isn’t related to RXRX.
As I said, CBRU is a gene editing company…while RXRX is a clinical-stage biotechnology company.
And if you thought their moves on Wednesday were related…
Well, you now owe me 575 burpees.