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Why a Small Cap Collapse Could Be Weeks Away

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Written by Timothy Sykes
Updated 10/11/2022 5 min read

Markets are teetering on the edge of a cliff.

Just one push could send them into a free fall and take EVERY stock with them…

Well, almost every stock.

Right now, waves of sellers greet every S&P 500 rally with a smack.

Basic chart technical analysis says even lower prices are in the cards.

Based on what I’m seeing, we could be in for the BIG FLUSH!

Thankfully, I know how to make money in ANY market.

You see, some patterns like the SUPERNOVA are so strong they can overpower heavy selling pressure.

One of my favorites right now is Global Tech Industries Group Inc. (OTC: GTII).

While CNBC sheep are freaking out about their 401Ks, I’ve taken 9 trades on GTII since Sept. 22, netting $3,511.84 on 6 winners and 3 losses

Both on the long AND short side.

The good news is when markets finally bottom, we’ll see some of the BEST OPPORTUNITIES in years.

That’s why I’m about to share with you the EXACT blueprint I laid out for my STUDENTS this weekend.

In it, you’ll discover what I look for in a market bottom and how I maximize my chances of riding the huge reversal.

But there is one KEY thing to remember….

Markets Fall Further Than You Think

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Penny stocks give most traders ulcers.

They rise and fall by tens, if not hundreds, of percentage points in a single day.

Watch it long enough, and you get desensitized to the movement, which is a good thing.

In my 20+ years of trading, I’ve seen individual stocks and markets rise and fall much more than anyone expected.

The dumbest thing anyone can claim is a stock can’t fall any further because it’s already down XX%.

Take NVIDIA Corporation (NASDAQ: NVDA), for example.

This profitable tech company is down more than 65% from its peak.

Yet, it’s up more than 275% from its 2019 lows.

The S&P 500 isn’t even down 25% from its highs.

When stocks fell during the pandemic swoon, they fell more than 35% before bottoming.

My point is that picking out the exact bottom before it happens is tough.

Identifying Market Bottoms

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Instead, I look for signs of a bottom and use the price action to confirm my thesis.

Markets tend to bottom on high volume and wide trading ranges.

Sometimes it’s a one and done event like we saw in 2020.

Other times, markets need several attempts to form a bottom as they did back in 2008-2009.

Interestingly, back then, the final bottom happened on lower volume than the prior two attempts.

When markets drop, everything tends to fall, with few exceptions.

However, right near a bottom, pockets of strength tend to pop up.

In 2020, we saw Amazon bottom out before the broader market.

Back in 2008-2009, the Nasdaq 100 bottomed in November 2008, nearly four months before the rest of the market.

That’s why I developed a method of trading that tests the waters of hot sectors, looking for potential leaders.

Trust But Verify

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With my account up nicely on the year, I see no reason to put it in danger.

However, I don’t want my students to miss the HUGE opportunities on the horizon.

So, I experiment with small trades in different sectors every week.

By using a wide cross section of stocks, I tune myself to the active market and get a feel for what’s working and what isn’t.

Plus, it allows me to practice my trading skills and learn even more about this trading environment.

At the moment, I’m only focused on a handful of SUPERNOVA stocks with heavy promoters like GTII or FingerMotion Inc. (NASDAQ: FNGR).

But I’m also on the lookout for themed movements like we saw with cannabis stocks the other day.

A basket of similar stocks moving higher can signal a potential shift, even temporarily.

I put these names on my watchlist to avoid getting blown out, look for setups, and take small positions.

If I lose, I keep it small and fast.

Otherwise, when those big runners happen, I’m at the party for the fun.

Making money during the good times is easy.

Surviving during the tough times is what matters.

—Tim


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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

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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”