What is it? It’s the effect the holidays have on the market.
How do holidays have an effect on the market? Simple: There are more wannabe traders at home gambling in the market. They’re on holiday, bored at home with their families, and they want to try to make some trades. They don’t know what they’re doing, and that can create predictable patterns.
I like to take advantage of those predictable patterns.
The holidays also bring more volatility. That’s mostly due to reduced trading hours and short-sellers covering their positions. The usual morning volatility carries right through into afternoon action. There’s no midday lull.
There have been some great examples recently of the holiday effect. I’ll share those tickers and charts later on … but first…
Table of Contents
- 1 How Will You Prepare for Holiday Trading?
- 2 A Warning About Holiday-Trading Short Squeezes
- 3 Stock Study Guide: 4 Holiday Trading Examples
- 4 How You Can Prepare for Holiday Trading (Like These Students)
- 5 Market Recap
How Will You Prepare for Holiday Trading?
Use your holiday time to study and prepare for the market. Learn the patterns. Be prepared. This will probably happen again around Christmas and the new year … and most holidays usually, but it’s not an exact science.
In this example, I was ready for a recent Friday morning spike. I even shared it in my watchlist to subscribers. But I chose the wrong ticker. I thought it was going to be CANF, but it turned out the best spike was on ASLN. I’ll show you that chart later…
Here’s a bit of what I alerted in my watchlist:
CANF, ONTX are two premarket winners to watch and remember today is a shortened trading day so holiday trading rules apply, stocks can spike MUCH more than you realize and it can happen quicker than you realize too so be on guard and be safe…because these stocks can crash faster than you think too so watch them closely at the market open, Today is a Friday morning which leads to many spikes on top of a holiday-shortened trading day so beware we can see some REAL volatility today…20-40% morning spikers can often become 50-100% winner in minutes if we do get the holiday trading spikes we have in the past.
As you can see, I was preparing my students for the morning spikes and warning them about the volatility.
I want to help prepare you, too — so you can avoid shorting too soon and getting caught in one of these squeezes. Or even better, help prepare you to buy, since these moves can create huge potential on the long side.
Holiday Trading for Penny Stocks: Replace Over-Trading with Study Time
You will NEVER regret spending a lot of time on your education because it leads to clear rewards; you can NEVER over-prepare!
A Warning About Holiday-Trading Short Squeezes
And the truth is, they’re not wrong. Technically, yeah, all these companies are junk. And most of them will eventually go down.
Short-sellers are like the new promoters. And they lure in other newbie short sellers with their logical argument that all the companies are awful and the price will fall.
But they’re not fully transparent. They don’t share their losses when they’re getting squeezed out of their positions. And I know they’re taking losses because I get emails from them. People who aren’t even my students come to me saying, “I should’ve listened to you.”
I tried to warn them…
The problem is there are too many short-sellers these days. They’re getting in too quickly because they’re not prepared. They’re just shorting any stock that’s up on the day.
Huddie, is one of my top students. To date, he reports profiting approximately a quarter of a million dollars primarily from Short selling is a terrible strategy right now, especially risk-to-reward wise. It’s just too crowded. And these short squeezes happen so fast, it can be hard to cut your losses quickly.
New traders especially aren’t prepared for these moves. That’s why I warn new traders about the dangers of shorting, but at the same time, I don’t want them to stop. I’m grateful for the opportunities it creates for the rest of us. Be prepared to take advantage of it from the long side.
Now let’s look at some chart examples of the most recent holiday spikers…
Stock Study Guide: 4 Holiday Trading Examples
You may be wondering what’s so special about holiday trading? How’s it different than any other short squeeze? Well, take a look at the charts below and you’ll understand just how powerful these moves can be.
Paringa Resources Limited (NASDAQ: PNRL) — Morning Spike
On Wednesday morning, November 27, the day before Thanksgiving, PNRL had a huge morning spike. It went from the $1s to the $8s within an hour! On Friday, the stock collapsed, opening at $3 and closing in the low $2s. This is a good example of the volatility in the markets around the holidays.
Here’s the PNRL chart:
Clovis Oncology, Inc. (NASDAQ: CLVS) — Earnings Winner/Short Squeeze
Earnings winners can run longer than you think. Combine that with a Friday and a shortened holiday trading day, and you can get a pretty powerful move. CLVS squeezed from $12.55 to a high of $16.62! All before 11 a.m. It was the largest one-day move in its entire run-up. The short-sellers are just too early. It creates these giant short squeezes that just keep going.
That’s a great thing for longs!
Since its earnings release on November 7, the stock has gone from the $4.30s to a high of $17.37! It then dropped down to the mid $8s and has bounced back to the $11 range.
Cancer Genetics, Inc. (NASDAQ: CGIX) — Short Squeeze
CGIX was up trending all day Friday, and then 10 minutes before market close, the stock goes from $7.20 to $9.20 in 3 minutes! That’s short-sellers getting squeezed HARD…
This stock isn’t normally a volatile stock, but with the added volatility from a shortened trading day and a Friday, it created a monster spike.
Take a look at the CGIX chart:
ASLAN Pharmaceuticals Limited (NASDAQ: ASLN) — Morning Spike
This stock doesn’t normally spike very fast — it barely moves 50 cents in a day. But with the increased volume it had in the days leading up to the holiday, it made the stock more volatile.
The two previous days the stock was spiking, it couldn’t hold its gains. And the big morning spike was no different. The stock went from $3 to $7 in seven minutes but then quickly faded off.
Some students were wondering if they should dip buy after the big move. I don’t dip buy holiday short squeezes. After the big moves, all the shorts are squeezed out and there are no shorts left to buy, so the buying subsides.
No rational person should buy a stock that’s up $4 in a few minutes with no news. Especially when it couldn’t hold its gains in the previous days.
How You Can Prepare for Holiday Trading (Like These Students)
Many of my Trading Challenge students were prepared and they killed it! Notice that nobody nailed it perfectly. You don’t have to hit the exact top and bottom on these plays — just take the meat of the move.
Trading Challenge Chat
10:11 AM LKScientist: Traded PNRL… In at 3.64 and out at 5.5. I screwed up my order and ordered 50 shares instead of 500. Still a 51% profit ($93) from $182.
10:59 AM RMcInarnay: took $CLVS from 11.90 to 12.45 🙂
09:11 AM CharlieTango: Long ASLN 500 shares @2.77 out @3.3
09:16 AM Petros_rok_nation: ASLN o/n swing, purchased at 2.26 a/h and sold at 3.10.
09:38 AM Peachtart: I sold ASLN WAY too early at 3.64….then it jumped up to over $5 !!! Damn !!
09:49 AM Iceman29: ASLN 288 shares bought @4.50/share out @6.00/share
09:50 AM GrmnWondrBread: ASLN in at 3.83 out at 4.29 for a $34.08 win. Entered CANF at 3.435 in hopes of a reversal and settled at 3.30 at a $10.63 loss. One good one bad…creed got the best of me on this one.
09:51 AM Sierra3: sold ASLN at 4.14 from 3.00 grrrr. hahahahahahaha
09:55 AM RPhTrader: ASLN made around $300, got out early, but happy
09:56 AM NEOTHEONE: bought 1000 shares CANF @$3.35 OUT $3.44…good %8.8
09:57 AM TJinx13: so many short squeezes today
I took a small position on $ASLN and got out with 13% gained. It seemed like it was struggling a bit so I got out with a clean profit. I left a majority of the move on the table but I’ll take this as a learning lesson, analyse my mistakes, and move on from here. @timothysykes
Took my 10% and got outta there!
Another successful dip buy!
In $ASLN at $6 out at $6.74 for 12%. Holiday trading on a Friday awesome time. Remember guys be smart and take the meat of the move. Like @timothysykes says singles add up over time. So thankful for studying and not trading as much lately.
Holiday trading isn’t tied to any stock, hot sector, or news.
It can be extremely volatile, especially on the shorter trading days. And that can create a lot of opportunities. Be prepared to take advantage of the big moves.
Be careful with any short positions. Actually, I don’t recommend you short sell at all if you’re a new trader. But if you must, keep your positions small.
Use your holiday downtime to invest in your education. Study, study, study!
I know the extra time and freedom that comes with the holidays is great. Most of you want to relax and take it easy. But if you want to change your life and feel free every day, you need to put in the work now. You won’t get there by being lazy.
I had to work for it and so do you. For me, it’s well worth it.
[Note that these results aren’t typical. It takes time and dedication and to build exceptional trading skills and knowledge. Most traders lose money. Always remember trading is risky … never risk more than you can afford.]
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