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Short Selling- Tim's Trading Challenge

The Next +1,000% Short Squeeze – Get Ready …

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Written by Timothy Sykes
Updated 2/16/2024 3 min read

Friday’s spike from MicroCloud Hologram Inc. (NASDAQ: HOLO) should be enough evidence to get you in the game.

Unless you’re just here for the drama. In which case, welcome. There’s A LOT going on.

I was trading HOLO on February 7 during premarket around the $3 level.

Never in a million years could I have held my shares to Friday’s $98 spike.

HOLO chart multi-day, 10-minute candles Source: StocksToTrade

But I did say it was possible …

These are short squeezes. HOLO isn’t spiking with bullish news. I documented it in this blog post. The company announced it was joining the Communications Industry Association.

That means nothing!

Short sellers were trying to build positions at the $5 level. I took screenshots from Twitter!

A short position from $5 to $98?!?!

Hopefully they cut their losses before that. But you never know, there could be short sellers still trying to guess the top. And in that case, the squeeze could push even higher.

My message to short sellers: Switch your strategy.

I know the stocks are garbage. I know they don’t deserve to spike 6,400%. The short selling thesis is correct. But there are too many short sellers in the industry right now. Especially in these crappy little stocks.

The price will crash eventually. But we don’t know when.

Join me and my students on the long side.

Trust me, I used to be a short seller. Now I’m long-biased because the short strategy is overcrowded.

And sadly, this message will likely fall on deaf ears.

Short sellers are too stubborn.

For all of my students looking to go long on the next inevitable short squeeze, here’s what I look for:

A Low Float

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It’s often more difficult for new traders to spot a short squeeze.

Because usually there isn’t any bullish news accompanying it.

The lack of bullish news is what tempts the short sellers to stubbornly pile in.

Now, there is one factor that we can use to pinpoint possible short squeezes before they go vertical.

A low supply of shares helps to squeeze out overaggressive and overabundant short sellers.

We’re looking for …

  • Low-priced crappy stocks
  • Spiking an insane amount in premarket (usually we aim for +20% but short squeezes are more obvious … )
  • With a float below 10 million shares.

StocksToTrade shows that HOLO has a float of 950,000 shares. That’s way below the 10 million share threshold.

When the market opens during premarket on Tuesday: we start to look for the next short squeeze.

Join us on the live stream.

There’s a very specific price level you NEED to keep in mind when trading these massive runners.

Don’t get stuck on the wrong side …

Cheers.


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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”