Hope everyone is had a solid weekend! February surely flew by!
Did you take advantage?
We have one week left on the deal we created given our partnership with CenterPoint Securities. A deal like this has NEVER been offered at this level so I do hope that you take advantage of it. If you didn't take time to review the deal please do HERE.
As discussed last week I'll be off desk a bit - as I am traveling to St. Thomas Sunday. Monday is a wash. I'll be on a fishing trip and won't be there for the pre-market broadcast. I should be able to check in Tuesday and Wednesday morning to offer the normal pre-market broadcast type of action as usual.
I think the best way to attack this market is to come prepared but without an aggressive bias. Be open to change. Last week I went from short to long quite a few times. I probably traded more long opportunities than I have all week.
I think it's important to understand what type of market we are in. Why were certain decisions made?
As soon as everyone thinks LUNR is the next HKD we see a second round of momentum come in (long bias) because it makes "sense" to trade only to see it unwind -75% the next day. Because LUNR happened, no one wanted to miss the 'next one,' so it made sense that the higher OCEA went, the more likely it was the 'next' LUNR.
Obviously, none of this is correct, and it's never that easy, traders are just quick to forget risk when they can associate a trade with something else that makes sense to them. Read the room, what do traders want? What are they falling for?
Remember when these outlier moves happen, no one is prepared for them - when everyone is - will it happen? Unlikely (think back on our CVNA discussion when it was in the thick of it at $18) See that tweet here:
Also -- cautious believing your own bias/desire.$CVNA sure everyone wants next XYZ (who knows it could be - no strong bias here).
But NO ONE EXPECTED it w/ $CLOV $AMC $GME etc
Everyone EXPECTS/WANTS it this time.
Don't force your bias to be right - it adds up FAST if wrong.
— Nathan Michaud (@InvestorsLive) February 2, 2023
So take it to the next trade Friday morning -- why was BAER a long idea? What made it of interest? (thinking about OCEA the day before).
Another example - take LHDX long on the FDA news - where have we just seen a similar situation, and how did it pan out? Just last week SRNE, now SRNEQ, filed for BK flushed down and rebounded .20s to .60s +, and now we had LHDX file for BK at 52-week lows drop an AHs FDA PR and well sure enough risking 2 cents at .16 for potential of .... ? .10 .20 .30? hit mid .4x's after hours. We just saw it last week it's fresh in people's minds.
And one last example of using information where you've seen it before - AMAM with the clear-out move over key level. Yes, the move and where it's going is likely obvious to call, but if you're oversized or trying to force it to happen on your own timetable - what happens? They swipe the ceiling, make you pay up for cover, and then walk. We saw this on TMBR as well as many others last week. (Also using AMAM information from Thursday to make Friday's trade).
There is a reason why I'm going over all of this. I believe the faster you can associate a move with something you've seen before, the more you can be one step ahead, prepare correctly and be aware of the warning signs.
All of these examples from this week were BEFORE IT HAPPENED or REAL TIME, not hindsight. My goal isn't to showcase 'told you so' my goal is to showcase how you can use RECENT information at your fingertips to make better trading decisions. Understanding market sentiment. Understanding what the market wants. Understanding what MOST retail will do and how you can protect yourself and stay away from these situations UNTIL the crowd passes.
If you're on the same side of the crowd it works great when it works - problem is if it doesn't, the contrary move happens so quickly you're screwed. My goal is to ALWAYS let the crowd pass before entering a position. If I do participate ahead (ie: front side or anticipating a particular possible move - it's always SMALL 5-10% MAX of 20% if I have crazy high conviction that I'll be right. The rest I wait for after the crowd passes).
Our t-shirt winner of the week is @redot9914
Video Scan and Game Plan
Stocks to Watch
LHDX big one on Friday huge alert by TradeHawk at .16 -- my average is mid .16s I held some over night sold the rest mid .2x's and .4x's from the news alert posted in the room at 4:09PM with plenty of time for the trade. Didn't expect such a massive move but hey, I'll take it. Goal was maybe 4AM ripper possible 7AM momentum -- but we'll see. After it blows off I'll look to fade it back down. It was a perfect storm given the BK news, the FDA news and the chart/price etc. Momentum trade, don't marry it.
CVNA really nice opportunity - I was sized up like mad but I didn't have enough of a padding when it slowed the fade to sit through the chop. Yes, it would have worked great but had it circuited up and ripped I wouldn't have been too happy so I wanted to size back out until things chilled a bit. And, they did - re scaled and got a good piece of the move before getting off desk Friday. I'd love to continue to fade this thing back to the $5s where it came from. You'll notice the most obvious fades like W LCID and CVNA etc all got squeezed out. When the crowd is all expecting the obvious and they're over sized we get these outlier moves forcing short cover to come in. On top of that, sometimes you have the short interest rates for over night holds makes it nearly impossible to hold size since it gets so expensive each night. That's what happened with AMC this week. Regardless check LCID and W and how they unwind I'd be watching all pops on CVNA for similar.
LAZR big volume and action right now not looking to step in front but ideally see a move off open trap again and blow out shorts before fading back to flat or red.
FSLY if market stays heavy this may be a lot like W LCID etc where it blew everyone out and back to reality. 945-10AM + trend join for me.
Failed Follow Through:
BAER morning shove and likely finds it's way back to $5s short term. Be cautious T+2 day if it's hanging around and you're trying front side of the move. Let a cover come in and pick up the pieces after.
TMBR nice clear out just like we saw on AMAM before the walk. Ideally morning shove vs. $2.90s on Monday for unwind. If $2.90s firms up - avoid.
AMAM be nice to see 5.50 + push vs. $5.80s again like Friday - I'd be curious to see if they pull off a raise next week.
ATLX doesn't get much better than the prep on Friday! Ringing the bell run up - didn't want to chase it down pre market so waited for it to ramp back once we had the red/green reject on the day I started to fade the trade. Worked like a charm. Ideally .50-1.00 + then fade back to flat or red again.
ECX nothing I love, but watching if we get a T+2 move to take advantage of - after that avoid.
GRIL nice break out chart no position. Monitoring.
BNTC .30s seems like a spot to set a price alert - no position.
IPDN continues to trend, came in some on Friday but soaked - still monitoring any day it has REAL volume - that's the day I will focus on a fade. 1-2 million + shares exchanged real fast I could see -50-70% move.
GNLX break out continues just monitoring for now - let it break out, over extend and let edge come to you.
NRSN trend after the big swipe and volume - type I look for to join no position yet but may position vs $1.70s need to check catalyst. I haven't done that yet.