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Former Supernova and Short Squeeze: Lessons From ASTC

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Written by Timothy Sykes
Updated 1/12/2023 14 min read

Full disclosure: I missed this former supernova and short squeeze trade on ASTC … for a number of reasons.

In any given stock, there are factors at play that are much, much larger than me … like the growing trend of uneducated newbie short sellers.

And sometimes as a trader, you have to make judgement calls. So even though I missed this trade, I’m OK with it. Because I remember to focus on the big picture.

These short-sellers are the main reason for the massive increase in supernovas that have created fantastic opportunities for my long-biased students.

Let’s break down this trade and why I cut losses quickly…

Astrotech Corporation (ASTC) Short Squeeze

On November 14, I bought Astrotech Corporation (NASDAQ: ASTC) in the morning for two reasons: its press release and its history as a former runner.

I’m a fully transparent trader, so I’m not afraid to admit I lost money on this trade.

I started buying ASTC in the $1.60s, but I had to cut my losses quickly because it had a very weak bounce. After commissions, my loss was only $160. That’s a very recoverable amount of money. This is exactly why I always preach to cut losses quickly.

But even though I lost money, I was on the right track. ASTC’s big breakout happened around 11 a.m. EST — a little later than I anticipated. Its most significant breakout happened around 11:30 a.m.

astc stock chart
ASTC Chart: 2-day, 5-minute candle — courtesy of StocksToTrade.com

Even if I bought it when I did in the $1.60s … best-case scenario … I would’ve sold this in the $1.80s because of the morning double top. Unfortunately, I ended up selling near the day low, but that happens. Instead of breaking out, this could’ve dumped hard. Better safe than sorry. 


I’ve mentioned before that short-sellers are large catalysts for supernovas. That’s exactly what happened with ASTC. The early and aggressive short-sellers got squeezed on ASTC, which caused its big breakout.

I got a lot of messages from short-sellers who either aren’t my students or were former students. They say…

“Sykes, give it up! All penny stocks crash eventually.”

They may be right, but that’s not the point. It’s impossible to know how high short squeezes will spike before they eventually crash. Sadly, a lot of these wannabe short-sellers follow newbies who haven’t studied enough. These newbies make assumptions and lead their followers to ruin.

I got like 20–30, maybe even 40 messages on November 14 from people shorting ASTC in the $1.70s, $1.80s, $1.90s, and covering in the $2.20s, $2.30s, and $2.40s.

Shorting these morning spikes is dangerous, and often, you’re just too early. If that’s you, you’re dumb and you’re wrong. You don’t know how high the stock will go. 

ASTC only ended up going to the $2.60s, so if you shorted where I was buying, you would’ve lost around $1.00 a share. What if ASTC would’ve gone to $3.60? If things got wacky, it could’ve gone to $4.60.

If you’re short selling, RIP. My prayers go out to you.

Don’t Short High-Volume Penny Stocks

ASTC traded nearly 30 million shares on November 14, and most of it was shorts getting squeezed.

If you really wanna short stocks, you gotta learn to be a little more patient. There was an opportunity to short in the afternoon.

I don’t know why so many short-sellers like to go in early. I guess that’s probably when there are shares available to short — that’s the problem with shorting these days. You grab the shares early, and you have to risk some pain.

Problem is, you don’t know how much pain you have to risk.

If you have a six-, seven-, or eight-figure account likes some big short-sellers do, then you can maybe keep adding to your position and eventually be in the green.

That’s why some people on Twitter like to say, “Look, shorting is so easy!”

Yet, the vast majority of new traders don’t have large accounts. They don’t have a lot of experience, and they can’t average up. So … they get crushed over and over again.

Using Proper Risk Management

I literally sold at the worst time on ASTC. But I had such a busy day, and I always stick to my #1 rule: cut losses quickly. So even though I was on the right track, I was in too early, and I paid the price. I can accept that.

I bought ASTC in the $1.60s and there was $1.00 a share of upside. As it turned out, there was only 10 cents of risk to the downside. That’s a damn good trade!

Even though I took the loss, there was roughly 10 times as much upside as downside. If you can get into stocks that have a 10–1 risk/reward … and you do it over and over again … you can become a profitable trader.

Sometimes you’ll lose the 5 or 10 cents, but sometimes you’ll make 50–70 cents …. or even $1 a share. Over time, these singles add up.

Too many people only judge a trade on how they did on it personally. Instead, I want you to watch how the stock performs after you exit. There’s always room for improvement. Maybe you didn’t even trade it or you didn’t make any money. That’s not the time to ignore a great trade. Study it, learn from it, and prepare for the next one.

Why Is ASTC a Good Setup?

ASTC is the kind of chart I want you to start thinking about.

I gave a Trading Challenge webinar on November 14 about the ASTC setup, but I think it’s essential for everyone to understand.

Forget about the short squeeze for a second, forget about the absolutely terrible 100-day chart. And the awful 200-day chart for that matter.

But if you go out to two years, ASCT spiked from the $2s to the $5s in two days. It also had a one-day spike from the $1s all the way to the $8s. It came down and spiked a third time from the $3s to the $6s. Then a fourth time, from the $3s to the $5s. That’s why it’s essential to look at multiple time frames.

astc 2 year chart
ASTC Chart: 2-year, daily candle — courtesy of StocksToTrade.com

Throughout 2019, it’s had a tough year and been in a continuous downtrend. However, the stock has four clear examples of large one-day spikes. So this is classified as a former supernova.

Unfortunately, it didn’t hold this latest spike well. Clearly, the chart’s indicating something’s up … maybe the company is going bankrupt or needs financing badly. So it’s not a huge surprise the spike didn’t last. But a lot of short-sellers who shorted too early and the people who didn’t believe in its spikeability ignored what happened in 2017 and 2018.

If you actually go back and look at the press releases from the previous days it spiked, the press releases are very similar to the press release that caused its latest spike on November 14.

The first spike in 2017 was for ASTC testing the product, the next spike was for European approval, then for U.S. approval and then for more testing of the product. All the press releases were related to one product, but the question remained if the product could actually be used in airports.

Today, we finally got the answer. The product is being used in, of all places, my home, the Miami airport.

Always Check if a Stock Is a Former Runner

A lot of people ask, “How did you know ASTC was going to be such a large winner? So many penny stocks have morning spikes and just fail…”

Again, four times in the past two years, ASTC had similar news producing a massive spike. And yes, by the next day, it did fail. But, knowing that there are so many over-aggressive short-sellers these days, you can buy stocks with predictable long setups and get massive spikes on short squeezes.

When a stock like ASTC spikes … please lock in your profits.

I’m very proud of a lot of my students. Many students got long ASTC, and some of them got in too early like me. But some of them made 10, 20, 30, 50, 70, or even 90 cents a share. I don’t think anyone made a full $1 per share … that would’ve been perfect timing. But they took the meat of the move and locked in gains.

If you make that kind of money, 10%–40% on a play like ASTC, it’s not random. It’s not gambling, nor is it luck. It’s predictability.

How to Prepare for the Next ASTC Play

I encourage you to go back and read all the press releases that spiked ASTC in 2017 and 2018. The more you read this information, the faster you can understand which press releases can move a stock.

With ASTC, the price action was very similar to the previous runs … The only difference was that it didn’t spike right when I bought it. It spiked 30–45 minutes later, but trading isn’t an exact science.

But unlike a lot of newbies who get discouraged because they lose money only for the stock to do precisely what they wanted, I’m encouraged. 

I’m encouraged ASCT spiked $1 a share. I generally prefer OTC stocks because they have cleaner charts, but ASTC was a reliable long trade. And I plan to take similar trades again when they present themselves.

Recent Tweets, Comments, and Trades From Students

Here’s a look at some of my students’ recent comments in the chat rooms and on Twitter…

Fall is in full effect and the market is hot! There are plays nearly every day now that the summer lull is over…

There won’t always be great plays, but when there are, make sure you’re part of the 10% that’s prepared. To help you with the fundamentals, check out “The Complete Penny Stock Course” book, written by my awesome student Jamil Ben Alluch. This book summarizes my best lessons.

From the Trading Challenge Chat Room

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11:01 AM RouxBourbon → MichaelGoode: regarding 11am as a time that matters, the spike is $ASTC. Do you think that was people or a person exiting because of that time approaching?

11:00 AM Huddie: $Astc impressive

11:30 AM redwagonrider: congrats to anyone who bought $ASTC consolidation above resistance. paying off here!!!

11:51 AM redwagonrider: $ASTC mentor trade analysis would have told me that a break above morning high of $1.87 that continues to hold and prove itself has the potential to continue to spike. Gotta stay disciplined

12:35 PM greenking49: $astc watching to see shorts getting squeezed later potentially

1:20 PM markcroock: $ASTC has not been a multi day runner in recent history no recent to believe it will change this time around

2:17 PM arturoil710: $ASTC the long was this morning when early shorts were getting squeezed

More Comments From the TimAlerts Chat Room

9:37 AM Anigai: Testing a new stratagy today for things like $ASTC & $JPEX

Whenever testing a new theory or strategy, don’t trade it right away! This is why I always tell my students to paper trade using StocksToTrade.

9:46 AM Jaykian720: $ASTC nice news but it’s only part of their testing program, i.e. Miami are deploying many different companies’ systems

9:50 AM Anigai: $ASTC Glad I chose a watchday. Perfect lesson from Tim as well. 2% better today so far i reckon

10:17 AM EAdapon: $ASTC looking good now. formed ascending triangles below 1.65

11:36 AM Lpena1214: $ASTC looking good but chasing midday spikes never ends well for me

More Comments from the TimAlerts and Trading Challenge ASTC Video Lesson

8:31 AM ibrahimaagne19: wow it pays to be prepared thanks for the example Tim!

8:37 AM asfricksrs: Thanks Tim, great recap of your trade w/pearls of knowledge/wisdom .. thanks for keeping it Real.

8:40 AM TonyG1: tks Tim Good Lesson! Capturing the meat of the move man! Thats what I aim for with each and every trade. No need for greed in this game!

8:41 AM Anigai: Very grateful for this video lesson Tim. I’m somewhat sure I seen $ASTC before you which shows I’m making the right moves in my education, really starting to feel like I’m making progress now even if I decided to only watch $ASTC and not trade. I promise to take the meat of the move.

11:07 AM greenking49: Great lesson here on ASTC!

Last, Some Great Tweets From My Students:

[Please note these results are not typical. These traders have exceptional knowledge and skills that they’ve developed with time and dedication. Most traders lose money. Trading is risky. Do your due diligence and never risk more than you can afford.]

What do you think of former runners and short squeezes? Comment below, I love to hear from all my readers!

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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 (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”