There’s an old expression on Wall Street that goes sell in May…and go away.
I normally subscribe to the idea but not this year.
We’ve seen some monster moves lately. I’m talking about +200% gainers in BDTX, MEDS doubling in 24 hours, and AHI skyrocketing by +1,000%.
Not exactly the dull days of summer.
But if you want any chance of taking advantage of moves like the ones mentioned above, then you MUST know about the latest trend in the market.
I spotted it about a week ago…and I’ve been riding it to profits ever since.
I’ll show you what it is and why it’s so incredibly powerful in this market.
Table of Contents
The Early Bird Catches The Worm
Summer trading is notorious for its slowness. We tend to see a drop off in volume and a decrease in volatility.
However, that’s not what I’ve been seeing lately.
We are seeing some incredible trading opportunities.
And you know what else?
A majority of these plays are being developed in the pre-market.
That is, some stocks are catching monster bids in the pre-market.
Some of them have catalysts like BDTX.
Shares of Black Diamond Therapeutics took off on Tuesday in the pre-market after the company released this headline:
Black Diamond Therapeutics Announces Initial Dose Escalation Data Demonstrating Anti-Tumor Activity of BDTX-1535 in Non-Small Cell Lung Cancer Patients Across Multiple EGFR Mutation Families
Others, like the ticker symbol AHI…are going nuts off with no news whatsoever.
Shares of AHI $0.30 to $3.88 in just two days…earlier this month.
Typically these stocks will fade during the open and sometimes throughout the day.
However, that’s not what we’re seeing.
Shorts Are Getting Trapped
Most companies releasing this pre-market news are pretty crappy.
And despite shares spiking, they are likely to go back down.
That’s not a revelation by any means.
But you know what?
It doesn’t matter.
Short sellers can get wiped out along the way.
I’ve seen it countless times.
For example, if you short a stock at $3 and go to $30 in one day…will you have the stomach to hold it? Can you afford to hold it?
That’s why you have to be either insane to short-sell certain stocks or have a bankroll so BIG you can absorb the blows.
Just look at some of the moves lately in:
MEDS
BDTX
How I’m Playing This Action
I’ve had some pretty bad losses in the pre-market over my career.
So when I see a stock taking off in the pre-market, there’s a good chance I don’t move right away.
Instead, I’ll watch it.
I’ll go over the charts and look at different time frames.
Some things I’m looking for include:
- Support and resistance levels
- The float
- If the stock has ever been a Supernova
- The trading volume
- How it reacts to previous announcements or pumps
I don’t care about short interest because I don’t believe we can get an accurate reading. Plus, determining whether a stock is squeezing doesn’t take a genius.
If the volume is strong, I’m looking for an opportunity to panic dip buy…
Like I did in BDTX the other day.
I entered the trade at $3.20 and peeled out at $3.42 for a solid 6.9% winner.
Of course, the stock went to nearly $7.
But you must remember, these are crappy companies, and you never know when the rug will be pulled.
It’s better for me to take quick profits and move on.
But that’s me.
I’m trying to teach my students how to trade safely.
And that’s why I trade the way I do.
Remember, my goal is to teach my students a process. It’s up to them to personalize it.
Bottom Line
Short sellers are like angry vegans. They try to shame you into being long these crappy stocks. And pretend they are high and mighty.
At the end of the day…we are all just speculating here.
And the key to winning at speculation is prop risk management.
Something these short sellers have no concept of. And the reason why I’ve lost so much respect for them.
But I don’t hate them…
Because without them, there wouldn’t be as many summer trading opportunities.
By the way, there is no better time than now to invest in your trading education. If you want to be my next millionaire student, CLICK THIS LINK TO GET STARTED.
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