Howdy, traders. It’s Bryce here.
How’s your Tuesday going? I hope your Money Monday went well … Honestly, I lost track of how many 100% and 200% runners I saw taking off.
I almost felt like the weekend never happened and we were still experiencing all the explosive potential Friday had to offer.
And on that note, now that you’ve got tons of short-squeezing tickers to choose from, let’s take a look at what makes one short squeezer better than another…
How to Tell if a Short Squeeze is Worth Trading
The small-cap market’s heating up! Whether you’re trading on Money Monday, Fortune Friday, or finding some luck in between, there are a few key things I want you to pay attention to that can make your high-stakes, high-volatility trades a bit safer if you heed them.
#1 – What Does VWAP Really Mean?
If you follow my mentor, Tim Bohen, you know VWAP is one of his favorite trading indicators. It stands for Volume Weighted Average Price. Simply put, it’s the price at which the stock last saw the most volume action, on average.
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So when I see a stock suddenly move upwards without corresponding volume, I get a little suspicious. I noticed this last week with the IPO pump-and-dump AMTD Digital Inc. (NYSE: HKD). I gave my students in Small Cap Rockets a tick-by-tick breakdown last Wednesday.
The bids coming in just seemed a bit too consistent, like clockwork. I suspected manipulation and the activity confirmed it for me. The thing is, even though it got bid up, trapped shorts, and squeezed, manipulation like that can also cause choppiness and a breakdown soon after. Knowing when to enter/exit is key!
#2 – Consolidation is Accumulation
We love to see stocks trading sideways for a while. Why? Because it proves that there’s enough interest in a stock for buyers to keep coming in. If there weren’t enough bidders coming in for every ask, the ticker would simply drop.
At the same time, sideways action tends to tempt overeager shorts. They see that it hasn’t gone up for while, maybe even for a whole day, and they start opening short positions.
From there, all it takes is a chat room pump or a conglomerate of psychic traders (joking, kinda) to take these shorts to task. Nowadays, traders are on the hunt for highly-shorted stocks to squeeze to the moon! Don’t be one of those shorts!
#3 – Manage Your Risk Based on Volume
There’s been some weirdness in regards to volume with a lot of these short squeezers recently. You know that one of our top criteria for trading is seeing high volume…
Lately, I’ve seen a lot of squeezers taking off into the stratosphere on low volume though. Take Liberty Tripadvisor Holdings Inc Series B (NASDAQ: LTRPB), for example. It was on this past Saturday’s watchlist.
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Tomorrow right after market open…
I expect these 20 stocks could move FAST.
To make sure you get the names of these tickers, before it’s too late…
And on Monday, it opened above Friday’s close at $17.55, but it didn’t stop there. It made moves of over 400% intraday, rising up to $82.98! And here’s the kicker, it had just over 200,000 in volume with around 76M shares at the time.
Look, those moves can tempt anyone, but the thing to remember is that low volume means low liquidity, and you don’t want to get stuck in the trade. So size down if you’re gonna play low-volume squeezers. It might be worth it if you catch the opening price. After all, it closed at $48.03, up 196.30% on the day!
When you’re making a living as a trader, whether part-time or full-time, you gotta be ready to pounce on opportunities when the market presents them. When a ticker says jump, you say: “how many shares and how high?”
Right now, the market’s responding very quickly to earnings releases. How the rest of earnings season turns out can have a measurable impact on the rest of summer.
Our mentor, Tim Sykes, will pick another trading expert’s brain this Wednesday, August 3rd at 3:30 p.m. Eastern for his take on the aftermath of earnings season. Get a jump on other traders with his unique take on what’s to come — join the NO-COST webinar here!