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How To Profit Off A Cheap Stock Spiking 3,200%?

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Written by Timothy Sykes
Updated 2/9/2024 10 min read

Maybe this is the first time you’ve seen a stock like MicroCloud Hologram Inc. (NASDAQ: HOLO)

But I’ve followed runners like this for YEARS.

It spiked so fast and so high that the chart proportions are trash when I zoom out.

So I’ve got a few charts for you. Here’s a good progression of HOLO on February 7:

HOLO chart 1-day, 1-minute candles Source: StocksToTrade
HOLO chart 1-day, 1-minute candles Source: StocksToTrade
HOLO chart 1-day, 1-minute candles Source: StocksToTrade

$1.51 to $51.

From premarket, to intraday, to afterhours … It spiked 3,200%.

Let me put that in perspective.

$1,000 of HOLO on February 6 would reach a max value of $32,000 less than 48 hours later.

That’s the best case scenario. We’re never going to time it perfectly. But when there’s 3,200% on the table, it’s a lot easier to take the meat of the move.

That’s how I teach my students to trade. And when HOLO started to launch, our chatroom went wild!

I wasn’t the only one to profit. Not by a long shot.

Source: Profit.ly

HOLO spiked for a very specific reason.

It’s different from the regular bullish runners with news …

We’ve seen explosive setups like this for years. And if this is your first time, buckle up. These are the market’s most powerful runners.

You won’t find these setups on CNBC, MarketWatch, YahooFinance, etc.

This is niche information.

The setup offers MASSIVE profit opportunities to those who UNDERSTAND the price action.

HOLO isn’t the first mega spiker.

And it’s far from the last …

How It Started

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We usually look for small-cap stocks that announce bullish news.

Those are the best spikers.

  • The low share price allows for larger percent gains.
  • The low share count indicates a low supply, which helps prices spike higher when demand increases.
  • And we need bullish news for a solid catalyst.
    • We don’t buy shares if there’s no reason for the stock to spike.

HOLO satisfies the first two factors …

The price was trading below $5 and the float showed less than 1 million shares. Anything below 10 million shares is a low supply.

But the news …

At 5:20 A.M. Eastern, during premarket on February 7, MicroCloud announced plans to join the Communications Industry Association.

Here’s what that means: Absolutely nothing lolol!

Nobody cares about the Communications Industry Association.

That’s like if your grandpa joined the lawn bowling club at his senior-living center. It’s the wimpiest news I’ve seen in weeks.

And yet, share prices launched 3,200%.

Here’s what happened:

This is a crappy stock. It doesn’t deserve to spike 3,200%. And everybody knows that. Especially … The short sellers.

For degenerate traders, a common strategy in the market right now is to short the crappiest stocks that spike in the market.

Theoretically, the strategy makes sense!

These crappy stocks will crash eventually. The movement is unsustainable.

But when short sellers exit their position they have to buy shares. That ADDS bullish momentum to the crappy spike.

And if there are too many short sellers trying to profit, the bullish momentum can turn into a MASSIVE domino effect of short sellers blowing up.

It’s called a short squeeze. And it’s the most powerful catalyst in the market right now.

Short Squeeze Proof

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There’s always a layer of secrecy in the market.

We don’t have a public real-time account of everyone’s position.

Here’s my point: There are short sellers that blew up yesterday. But very few of them will share that information publicly.

Luckily, I took some screenshots early on February 7 that show short seller activity as proof.

At 10:04 A.M., still early in the morning, this short seller admitted to a $5k loss.

Even earlier, at 9:19 A.M. there was a short seller eyeing the $5 level.

Remember that HOLO ran to $51. A short position at $5 … that’s a 900% loss.

Short positions CAN lose more money than they’re originally worth. That’s what makes the strategy so dangerous.

I saw HOLO spiking in premarket with crap news. And thanks to my experience in the market, I knew it was a short squeeze.

I even alerted my students in the chat. They had ALL DAY to build a position on this insane runner.

In the video below I explained the opportunity on HOLO during premarket. When the price was still $2.

Again, I wasn’t the only trader to profit.

But seeing as I’m the mentor, let’s go through my trade and the strategy.

Breakout Pattern

Mornings are some of the hottest times to trade in this market. That’s why I’m up early watching the hottest setups.

Profits don’t happen on YOUR schedule, you’ve got to follow the market when these stocks are the hottest.

My real-time trade notes are below:

Source: Profit.ly

And there’s a chart below with my position overlaid:

HOLO chart 1-day, 1-minute candles Source: StocksToTrade

That ‘tiny’ dip during premarket gave me 11%.

A fraction of the 3,200% available that day. But when 90% of traders lose, and short sellers are blowing up their accounts all day … I feel pretty good about an 11% profit.

Also, you’ll come to understand, I’m a better teacher than a trader. Sure, I have $7.5 million in trading profits. But some of my students (Jack Kellogg) already have more trading profits in fewer years.

I sold this stock too early.

But my students got a formal alert at 8:27 A.M. Eastern:

And I have to repeat myself: Traders had ALL DAY to build a position.

Afternoon Spike

There was another blatant profit opportunity in the afternoon.

I didn’t catch it because I was asleep. I’m traveling in Asia and had to shut my laptop before the market closed.

You know, jet lag.

But this is the alert my students received at 3:18 P.M. Eastern before the market closed:

Source: XGPT

An entry price at $11.10.

And the stock ran to $51 during afterhours.

Even if you held until the next day, February 8, when the market opened prices were still trading around $40.

There’s no excuse to sit on your butt right now.

The 2024 market is on fire. And HOLO is not the last short squeeze of the year. Take advantage of this momentum while it lasts!

Here’s the key: New traders learn fastest if they can see these plays happen in real time.

That’s why I hold livestreams. I can cut through market latency and show traders this process as if they were trading it themselves.

Hindsight is 20/20

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After the HOLO spike it’s easy to think: “I just have to buy at $2 and sell at $51”. 

But when you’re in the thick of it, it’s not so transparent.

Live video lessons are your key to understanding this profit process.

I’ve been trading with the same patterns for over 2 decades.

They’re the same patterns that my now +30 millionaire students use to trade.

And judging by the chatroom after HOLO spiked … There are a lot more students on their way to the $1 million milestone.

This isn’t rocket science.

I show traders how to recognize the best plays.

Then we get in and out before the crap stock crashes.

Join us for the next LIVE profit opportunity.

I’ll see you in the chat.

Cheers.


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Author card Timothy Sykes picture

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

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* 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 (205) 851-0506 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”