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Short Selling- Tim's Trading Challenge

How To Target The Next Short Squeeze

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Written by Timothy Sykes
Updated 4/1/2024 8 min read

There are new opportunities to profit every single day right now.

The 2024 market is red hot, and since three out of four stocks follow the market, the intense bullish momentum is causing our favorite stocks to spike higher.

I’m talking about cheap runners that are easily targeted by short sellers.

I know that it sounds a little backwards: “Why would I buy shares of a stock that short sellers are interested in?

The crappiest companies can spike hundreds of percentage points. Especially if there are a lot of short sellers trying to profit.

We saw one example already this week. Take a look at yesterday’s 170% spike on CXApp Inc. (NASDAQ: CXAI), every trading candle represents one minute:

CXAI chart intraday, 1-minute candles Source: StocksToTrade

I managed to pull a $604 profit from the spike, my starting stake was $6,834.

It was 8% of the total 170% move.

I’m not trying to catch the whole spike. There’s no way of knowing how high it runs.

That’s why we focus on stocks with the biggest percent gain. So that we have more room for error.

$604 might not look like a lot of money on its own. But small gains add up. I grew my account past $7.6 million making one trade at a time. My profit chart is below:

Source: Profitly

And I’m not the only one using this process to profit. I have over 30 millionaire students and more on their way. See the Tweet that I reposted below:

There are new trades to make today.

And they’re setting up right now …

Everything You Need To Know

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A short squeeze happens when there are too many short sellers in a stock. In our case, maybe there’s a crappy little company like CXAI that spikes with equally crappy news.

Yesterday morning the company announced a partnership with Google Cloud to help deploy the CXAI platform. It sounds promising, but in reality, nothing has happened yet. This is just an announcement to potentially do business. We’re not seeing clear value added yet.

The price spiked in the morning, and that’s what lured in short sellers. Shorts saw the bullish momentum, they recognized that the company is trash, and they built positions in hopes the price would crash.

But … If there are too many short sellers in a stock, any bullish momentum could cause them to panic and buy to get out. That adds to the bullish momentum, and as a result we see a domino effect of short sellers blowing up.

Look at how aggressive the move was yesterday:

CXAI originally started running because of the announcement. But the spike to 170% was mostly induced by overaggressive short sellers.

Lucky for us, long biased traders can build profitable positions on these squeezes. And you can watch it happen in real time.

There are webinars today at:

  • 10 A.M. Eastern
  • 2 P.M. Eastern
  • And 8 P.M. Eastern

Click here to watch my millionaire students trade these runners LIVE.

My position is overlaid on the chart below:

CXAI chart intraday, 1-minute candles Source: StocksToTrade

I was only in the stock for a few minutes. That’s all it takes when we trade massive runners like this.

And I’ve got another example that gapped up over the weekend …

Evolv Technologies Holdings Inc. (NASDAQ: EVLV)

© Millionaire Media, LLC

This is another textbook short squeeze that I snagged a profit from.

Study these examples!

There could be another short squeeze setting up as you’re reading this. The more examples that you see, the quicker this process will start to click.

EVLV is an AI company whose technology was mentioned last Thursday by New York’s Mayor Adams. The EVLV software uses AI to detect concealed weapons. And New York will attempt to use the tech to make subway systems safer while also shortening security lines. This way people don’t have to empty their pockets or take laptops out of bags to board public transportation.

The price spiked 30% on Thursday before the market closed for the long weekend. I bought shares to sell into Monday’s gap up.

The bullish news started the initial spike … But EVLV is also in the middle of a securities lawsuit. And that’s a bearish catalyst.

As a result, short sellers likely piled in after the news broke.

Yes, the news was decently bullish, but the looming lawsuit is a huge catalyst for short sellers.

Unfortunately for them, they’re stubbornness and overaggressive nature led to another bullish spike on Monday.

My trade is on the chart is below, every candle represents 3 minutes.

EVLV chart multi-day, 3-minute candles Source: StocksToTrade

And this momentum isn’t going away. In fact, it’s about to turn up a few notches.

The $2 Trillion Bullish Catalyst

© Millionaire Media, LLC

There’s a government event looming on the horizon. And once it hits, everything points toward an all out buying spree.

Three out of four stocks follow the market.

That’s part of the reason we’re seeing so many runners right now, because the market is hot. But it’s nothing compared to what’s about to happen in a month.

That’s right, we’ve got about one month to prepare!

The last time this happened, market indices like the S&P 500 ETF Trust (NYSE: SPY) rallied 100%! Take a look at the chart below where every candle represents one trading day:

SPY chart multi-month, 1-day candles Source: StocksToTrade

The market is already hot. And once this catalyst takes effect, I expect a HUGE market reaction.

Don’t get left behind!

I’m holding a LIVE briefing session this week on Thursday, April 4 at 8 P.M. Eastern. There’s just enough time to get in!

Reserve your spot and bookmark this link.

If you thought these short squeezes were big before … Get ready. You ain’t seen nothin yet.

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 (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”