Runners after runners…
Stocks are soaring, with gains of 33%, 67%, and even 168% in a single session!
If you’re not using this tool, you’re likely missing out on much of the action.
But I’m not writing to you today to rub it in your face.
We all know that having access to fast and reliable news is vital. It’s the key to staying ahead of the game.
But if you want to take your trading to the next level, you must start thinking IMPACT.
Yesterday, a specific positive news headline was major for one sector.
However, not every stock in the sector reacted the same way.
One barely moved, while the other gained 64% at one point.
I’ll show you what you need to pay attention to and how to use it to make smarter trading decisions.
Catalyst Trading Remains Hot
There are strong themes in the market that last months…like the one we’re seeing in AI right now.
But there are also short-lived themes…like what we sometimes see in crypto, EVs, and biotech.
You know what else?
Just because there’s a positive catalyst in a sector…doesn’t mean that all those stocks in the sector will react the same way.
For example, yesterday, the Breaking News Chat delivered this headline in real-time:
China unveils $72 billion tax break for EVs, and other green cars to spur demand
Now, if you’re reading that headline…
You probably think it’s SUPER bullish for Chinese EV stocks like NIO, right?
Surprisingly, the news had no impact on NIO shares.
However, that wasn’t the case for the ticker symbol UCAR:
Shares went up by over 50% at one point…
Going into Wednesday’s session, UCAR had a market cap of $299 million. The company isn’t profitable and is barely generating revenues.
But well, the fundamentals of the company might be weak.
Traders are interested in other aspects of the stock.
For example, the float, as in the number of shares available for trading is relatively low.
According to StocksToTrade, only 7.15 million shares are floating.
Low-float stocks with bullish catalysts have the potential to squeeze and go full-blown Supernova.
What Likely Happened
Shares of NIO were down slightly on the news, LI Auto shares were up, but nothing compared to the gains we witnessed in UCAR.
Why?
Stubborn shorts.
The same clowns that caused AHI to spike yesterday and have a triple-digit gain for no reason.
This is EXACTLY why studying pays off, $AHI lured in early/over-aggressive shorts & then squeeeeeeezed the bastards EXACTLY like my video lesson yesterday morning said: https://t.co/4QtwrgEF3J & now https://t.co/occ8wKmlgm students are bankingggggg, please retweet & congratulate…
— Timothy Sykes (@timothysykes) June 21, 2023
I can picture it now…
The short sellers are all hanging out in shady discord chats, looking for their next stock to attack…they see the news out of China…and the move UCAR is making…
Clearly it’s short, right?
After all, UCAR barely makes any money and is far from profitable.
While that’s true…UCAR is probably a crappy company…I say…who cares.
At the end of the day, we were in this for short-term trading opportunities. Fundamentals don’t matter if you are in a trade for a few seconds or minutes.
That’s why you are destined to get wrecked when you use logic and try to short-sell.
But at only 7 million shares or so…it’s not hard to squeeze the shorts.
And that’s exactly what they did to them on Wednesday.
A not-so-big headline turned into a squeeze in UCAR
What It Means For You
Start paying attention to float.
I know many traders will tell you to focus on short interest. But from my experience, you can get reliable short-interest data. And if it’s unreliable, you can’t make decisions off that information.
On the other hand, you can see when a squeeze is occurring just by looking at a price chart.
Stocks with floats under 20 million are more likely to squeeze if they can catch the right catalyst.
If you’d like to learn how I trade catalysts, you’ll want to check this out.
Leave a reply