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Trading Tips-Tim Sykes Penny Stock

The #1 AI Play For Small-Account Traders

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Written by Timothy Sykes
Updated 2/26/2024 5 min read

There’s a very specific kind of stock I’m watching right now …

These tickers can offer HUGE profit opportunities.

But it’s important to have eyes on them before the price goes supernova. Because currently, share prices are still cheap.

Especially compared to some of the other AI stocks in the industry. Take a look at Super Micro Computer Inc. (NASDAQ: SMCI) in 2024 …

SMCI chart multi-month, 1-day candles Source: StocksToTrade

The company provides high-performance data services for cloud computing companies.

It’s an AI-adjacent stock. But even before the spike this year, prices were well over $100 dollars per share.

Due to the infancy of the AI sector, we’re still likely to find companies trading at a lower price that are only now showing signs of success thanks to AI and the tech sector surge.

We have to be careful when choosing which AI stock to play. But I’ve got a framework that helps.

SMCI is too expensive for my taste. But there’s a clue hidden in SMCI’s spike that can help us find the next low-priced runner.

And I already have eyes on one of the most recent spikers.

AXT Inc. (NASDAQ: AXTI)

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AXTI announced earnings in the afternoon on Thursday, February 22. It already spiked 110% …

Shares started to move during after hours. Sometimes that can be a sketchy sign.

Here’s why: We like crappy stocks that announce news in the morning because it’s well timed to spike during intraday hours. If a crappy stock spikes during after hours, it can be difficult for the price action to stay bullish through the afternoon, through all of premaket, and intraday trading.

But AXTI surged the whole day on February 23. That’s when I knew this stock was different …

When AXTI consolidated into the close, I took a position on Friday and held shares into Monday’s open. It was a textbook weekend trade.

My trade notes are below:

Source: Profit.ly

I got too greedy and missed the better exit. But I’m still glad to be out with some green.

Plus, I was able to build a new position intraday on Monday, February 26 and I snagged almost $1,000, with a starting stake of $19,547.

Source: Profit.ly

Here’s the trade overlaid on a chart:

AXTI chart intraday, 1-minute candles Source: StocksToTrade

You don’t need to be in these plays long!

Pay attention when it counts.

The Next AI Spiker

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I’m still watching AXTI, and here’s why:

The company announced positive earnings related to AI.

This is a direct excerpt from the earnings call on Thursday, February 22:

“Sales grew 10% in the quarter with early signs of recovery in the power market and brand new demand related to artificial intelligence.”

– Dr. Morris Young, Chief Executive Officer of AXTI

The AI sector is the strongest in the market right now. You already saw a chart of SMCI spiking in 2024.

Well guess what: SMCI also announced positive earnings before its historic run past $1,000 this year.

I posted the news story below, followed by the SMCI chart.

Source: CNBC.com

 

SMCI chart multi-month, 1-day candles Source: StocksToTrade

I’m not saying AXTI will definitely continue its run, like SMCI did.

But I’m definitely watching it because it could!

And on that note:

I’m watching for any other low-priced AI plays that spike with positive earnings.

The AI sector is still in its infancy. Some of these companies are only realizing profits a year after the AI boom started in early 2023 …

Be one the first to find the next AI spiker with solid financials: We’re covering these plays LIVE.

Cheers.


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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”