What's up everyone? All right? So I want to go over this uh, epic short squeeze that we had today on Am Am. This was pretty impressive. Stock goes up just under 1 000 and it did it in about three hours. So this is obviously a crazy move.

Um, we're gonna get into the chart: I'm gonna walk you through sort of what I saw how I traded it and I didn't really fully capitalize on it for a couple different reasons which we'll talk about. but I Also want to talk a little bit about the current sentiment in the market? Uh, but why don't we first look at this chart. So we have a stock here that started the day early early at like 50 cents a share. All right.

So the stock initially pops up right here. as you can see from 42 cents up to about 50 and this is when it first came to my attention. So for what it's worth, um, we had a Trader in the uh, chat room. He said he just bought 25 000 shares of it at uh, 55 cents a share? All right.

So this was the highest volume candle of the day. Right there volume start coming in, it goes from 55 up to 60. it goes up to 70. And you know what he did, he sold his position.

You can't blame him. It's a pretty good trade, right? Four or five thousand dollars, 20 cents, 25, 000 shares. And obviously you know there's no way to know that the stock is going to go that high. Now we're day Traders over here.

Uh I certainly am. Most of you probably tuning in are as well. so we're not Buy and Hold we're not. You know the type of traders who just get in and then walk away and you know a few hours later come and check our positions.

Most of us are using our Capital pretty aggressively. So if you know you have a twenty five thousand dollar account for me I might be putting the whole 25 000 into a trade and then looking for a 10 return on that trade, you know 2500 gain and I'm out because I'm using that uh that Capital so aggressively I have to monitor positions really closely because I can't afford to have a trade all of a sudden drop 30 40 on me, my account would be blown up right? That would not be acceptable. And so my Approach for day trading is that. generally speaking, I only take one trade at a time and I'm focused intensely on that trade.

And so when I see something up here like you know, a clear pullback pattern this big red candle or this extension candle going up this big green candle with a topping tail, I'm taking profit into it. Now This is what we're doing as day: Traders We're leveraging large amounts of capital to profit on relatively small moves in a stock. So a 10 cent move, which you know for an investor is nothing for us, could be our daily goal. Boom.

Just like that. All right. So uh, the trader uh, that took this this morning in in the chat room. he's got his 500 000 badge.

he's a verified profitable Trader A really nice trade on this. Uh, but he takes his profit so then it ends up going uh and breaking out right here. and you know some Traders I'm sure took that trade over 78 cents. However, I saw that and I was like I don't know guys, it's a little cheap.

Uh, you've got a couple topping Tails there at 78 cents. I'm not sure that we're gonna see that that follow through. well you know I was wrong and it goes It goes up to 87 cents. It squeezes as you can see here in that one candle up to 93 cents.

Then we get a little pullback. Under a dollar comes up to a dollar and it actually pierces the level and goes up to a dollar two before dipping back down. Typically that's a short. you see the break above and then back below short with a stop at the high profit taking for Longs right around that level.

Okay then I see it come back up and my entry? a dollar and seven cents. My entry was actually as soon as it retested a dollar I got in, uh, right here. So that was my entry. That was my first entry right there.

which as it turns out, was a terrific entry because it ended up going up like a solid 300 percent from there. But naturally I took my profit fairly early on as well. So I got in and I started taking profit on this. Uh, I don't know somewhere around.

um, a dollar twenty and then I got back in on this pullback right in this area and took profit again at about a dollar 22. So these are small trades, so I'm back in around here taking profit back here at a dollar twenty two, all right and then coming into the open. This is where uh I got the next trade. So I got long here for the break of uh, the pre-market High which was 124.

and we squeezed up to 133. Fantastic! And then we dropped down. We sold off hard and I was like, all right I took my profit by the way. so I got in again another invest another Trader who's not a day trader might still be holding from who knows where you know I get in I I take my profit up here.

uh, it then pulls back and this candle now I didn't see that coming that right there that that was kind of a big deal all of a sudden in that candle, we got that squeeze up and it halted right at 134 which was the previous high. So I wasn't in that trade I really didn't see that coming. but I did understand that a lot of people were talking about this as being a short position. The stock was already up 190 when it was hitting you know, a dollar.

So there were people that were shorting off of that break of, um, the pre-market High Adding adding adding and then you got that top 135. and now they're just looking for it to break down below a dollar for that all-day fake. So this gets in a little conversation about Marcus Sentiment So as you know, I'm sure you understand that there's long biased Traders And then there's short biased Traders And then there's also a group of traders who comfortably switch from long and short and they go back and forth. In the last month or so, we've seen a lot of the short biased Traders doing quite well essentially.

and there's different techniques for how to short stocks. Just like there's different techniques for how to buy stocks alongside, but one technique that a lot of short sellers will use is as stocks are going up, they're shorting it. So if a stock, for instance, goes up to a dollar 20, they're shorting it a dollar twenty. and immediately because they're shorting as the stock is squeezing up, they're expecting to go red on the trade.

So they start with let's say a thousand shares and then it goes up to a dollar 25 and they add another thousand goes up to 1.28 They add another thousand. and so when you look at the way these uh, short sellers trade, they're adding, adding, adding, adding, adding as a stock is going higher, so they're going Basically their P L from when they enter is going more and more and more and more red until they get the confirmation of the reversal. Now you might say, well why don't they just wait for the confirmation of the reversal and the answer is because by the time you get that confirmation, you're already well off the high and you've missed a good entry and so scaling in does make sense. The inverse to this would be to the long side where a stock is selling off.

Maybe it's dropped 20, 30, 40 percent. It's a bottom bounce reversal. You've got like 10 consecutive red candles and you start buying it and usually I look at you know, half dollars and whole dollars as areas to start adding and I'm looking for that spring off the low. So these are both inversion strategies where you're trading for a reversal back to some equilibrium which is usually like the volume, weight, average price.

although for some Traders it's just a quick reversal back to like the 9 or 20 moving average before the next move higher. So like on a weak stock, you could be buying for the bounce off the low and the stock ends up just bare flagging and then going lower And that can still be a profitable trade just like a short seller potentially shorting something that's going higher. And then as it pulls back forming a bull flag, they're taking profit and they're green as long as they added enough going higher. So this is a strategy where, um, certainly there's a lot of people out there that trade it both both buying weak stocks and shorting strong stocks.

So it's a reversal strategy, but it requires quite a bit of conviction because you're almost definitely going to start the trade and go into the red all right now. Here's the problem with that strategy. and listen. I'm not trying to call any strategy out because my strategy is not perfect.

There's no such thing as a perfect strategy. Every strategy is going to have certain degrees of loss, where you're going to have trades that you know go against you and so in the case of Am am on this one, you know I I didn't My strategy didn't call for for just buying it right Here it squeezes up and so what ended up happening is I think that there were some uh, short sellers that ended up getting stuck. So it now is halted up all right. So we've got a halt up and it opens and halts up a second time.

All right. and I bought I I Did a dip and rip in this area. hods up at 55, then it opens higher, squeezes up to a dollar 75, and then halts down at a dollar fifty one. So again, this is an example where some traders who would maybe be really quick would have sold short, add more short, add more short, add more short, add more short, and then as it drops right here.

Potentially they could be covering for profit. right? Covering Back down here like a dollar fifty two. and again, that depends. If you start with ten thousand and then add a thousand A thousand A thousand, your cost bases will be low.

If you start small with a thousand, and then add one thousand, one thousand, one thousand, three thousand, and four thousand, your cost basis will be higher and this would be profitable. So then we come back up. All right. So now, I Take this trade here for the long over 170.

and we squeeze up into a halt at 172. And then all of a sudden on resumption, it resumes and goes into another halt at 197.. And now the traders who short this leg up shorting as it's going higher. Who didn't cover? Now they're getting squeezes, making new highs right here.

So this is where we're getting a real short squeeze in this area. Okay, so in this candle, here you have you have buying that's coming in two forms. long traders who are chasing the momentum and expecting that we're gonna get a continued squeeze, and short sellers who are covering for a loss. Now you have a big imbalance to the buy side.

It resumes and goes up to 210, Halts again it resumes and goes up to 250. Holy smokes. So now this is where and and you know for what it's worth. If you short 10 000 shares of this at a dollar 25, that's a 12 500 position.

All right. So if you had a twelve thousand five hundred dollar account, you took that whole thing short. Well, the problem is to buy back those 10 000 shares. 250 is going to cost you twenty five thousand dollars, right? So all of a sudden immediately you're getting potentially broker liquidation Because when you short a stock, you have the potential for an infinite loss.

That's in theory, because if you know what what happens when you have a stock, you know just for reference, like an HKD on The Daily and I'll just show you this daily. Um, that ends up going to twenty five hundred dollars a share. Two thousand Five hundred dollars a share. Just like that, if you shorted ten thousand shares at you know, 20 bucks as soon as it went to 200, all of a sudden you're down two million dollars, right? Or well, let's see 20 000 to 200, right? And then I mean it's just you could lose an incredible amount of money.

But in in theory now obviously. Uh, you can set stops. But one of the challenges on these low price stocks. and this is specific to low price stocks.

So here's a challenge on these low price stocks When they're trading at 80 cents 90 cents a dollar. there's so much liquidity you could buy Fifty thousand Hundred thousand, Two Hundred Fifty thousand, Three Hundred four, Five Hundred Thousand shares. You could take huge positions. This right now today has total volume of 64 million shares so you could easily trade hundreds of thousands of shares.

And if your shorting if something's going up, if you could just keep adding 10 000 shares on the ass. Ten thousand Ten thousand, Ten thousand, Ten thousand. and next thing you know, you're in 150 000 short position. Now once it starts to get more expensive, notice that the volume is declining.

So let's just look for for here, just for a second. Let's look just at the volume. All right. So what you see is as it's going higher, the volume is decreasing and this is very common.

You have peaking volume on um, a couple of red candles, but the highest candle of the day has a relatively light volume. So now for what it's worth, buying back 150 000 shares of this stock when it's at two dollars and fifty cents is a lot more difficult than buying 150 000 shares at 87 cents once they're over a dollar. So you end up having in this case The Squeeze up to 250. And now what I think ends up happening is you're getting some Brokers liquidating positions there.

They have a client who has a short position that is negative. It's in the red and exceeds the equity that that person has in their account. and now the Brokers Like whatever this person ends up losing, we're going to technically be on the hook for until we can maybe get it back from that person. So that's when the broker just starts sending out the buy orders to cover it.

And the problem with these low price stocks is they halt so quickly and then they Gap higher so there's not enough liquidity to move in and out. So seriously here, it ends up halting up on this candle on 1.5 million shares. It holds up on this candle on another 1.6 million shares. It halts up on this candle on 800 000 shares so you could see how it wouldn't take too many really big short sellers squeezing this to be squeezing the stock higher because of the number of shares for them to buy to cover.

So it ends up halting down Right Here it's a high of 197 which is crazy and then it halts down right here it drops, it sells off, it hits a low of like 150 and immediately halts back up. halts back up at 170 at 275 and is showing a resumption of three bucks. So now in between the halt, this is where you really got the Epic squeeze and look at the volume on this. The volume is so light, So it holds up here.

800 000 shares. It holds up again on 500, it halts up again on 400. and then here it's opening this much higher on 700 000 shares of volume. So you're seeing declining volume as you're getting that rapid expansion.

and this is really a short squeeze. And you know I mean I Don't know, um if there are any Traders out there that ended up losing six or even seven figures on this type of on the stock, it's it's easily possible. I Just you know I Don't know. but this was an incredible move so you know and on the long side for me.

Unfortunately, aside from a couple of Trades this this pullback right in this area. This happened. It halts down, then it opens and halts up immediately. There was like no time to take a trade.

Several of these halts here were so instantaneous, there was no time to take a trade. How and why would it halt without that hesitation? And that to me is someone basically just doing a market buy order That could be a broker liquidating a position. So you may have had someone that ended up accumulating a really large short position on the move. From maybe 75 cents to a dollar and between a dollar and a dollar 25, we had a lot of volume on this one.

Um, let's see, let me just switch this chart here for a second. So on this chart here Uh, you can see the intraday volume profile. So so right here pre-market So this is this, just shows you the volume. Um, basically how the prices it occurred at.

So you had peaking volume right in between this area of like a dollar fifteen, a dollar, twenty three. which is where I was trading at pre-market and that was the area where it was super thick. You could I mean I was buying 20 000 shares in and out with no slippage. You could have easily bought 200 000 shares.

It would have been no problem. This thing was so liquid. Tons of volume right? But then you get into these areas where there's not a lot of liquidity and all of a sudden it moves fast from 120 up to 150 and then it hits this High here. Then you have another period of pretty high volume and then it rips up again on light volume.

There's no liquidity. Then you get this area here that's got more volume but I'm but that is from the price action that occurred right here, not from the price action that occurred before it. So that was from and I Don't think this updates based on what you can change these settings, but um, let's see just if I change it by visible bars. So if I go back here.

this is basically what it was. We had a ton of liquidity right in here and then once we broke out of that, it just moved real fast. So now there wasn't the liquidity to get in and out of position and this has been a real problem in this market for the last like six weeks is that we haven't had a lot of liquidity so it has been harder to accumulate big positions and we've seen these really big drops. So in any case, you know this one ended up being a parabolic short squeeze and on this move up here no doubt there were some shorts that got that got buried on it and are there some Longs that bought the very top up here thinking it was going to keep going? well I don't know how much of this volume was to the buy side, but presumably uh, that's possible.

although it could have still been buy orders that were covering short positions. so I don't know. But in any case, right now you're in this consolidation between three uh, 305 on the high side and 249 on the low side. You know.

one of the things that I'll say again, I'm not I'm just sort of looking at this as an example of a pretty powerful short squeeze and we think about the mechanics of a short squeeze and how it happens. It's fueled by a massive imbalance to the buy side with very limited numbers of people out there selling the stock. and when you have that Supply demand and balance, you get these huge moves. And so you know the market makers on this, they're stepping back.

They're not sitting here with a big order to sell it because if they do that, they're going to go short the position. They see that huge imbalance to the buy side. They're stepping back. So the market makers are not doing a good job making the market so to speak on the stock, it thins out and all of a sudden you get these really quick moves.

and the problem for the traders that get stubborn, the higher it goes, the better it looks for a Shore and you know what. Eventually you're right. So is there a short seller out there today who start a short position down here and kept adding and adding and adding and adding and adding and adding and adding and adding. I Am sure somewhere there is and is that person green right now they might be.

If they added enough up here they could be. However, that it, uh, the the short strategy that has an absence of stops is a strategy that will eventually result in a blow up. Every strategy needs to have risk allocation where you say this is where I'm willing to risk and if I get stopped out, that's it. And so there are some strategies that have really really high accuracy and lots of small winners.

But then when those losers come, they're big and you know, look if you're making money and that's your strategy, you just allocate that every six weeks or whatever it is. I'm gonna end up you know, having you know 15, 20, 30 green days and then a really big red day. And that's just the way my strategy is. and I'll have another 15, 20, 30 green days and then another big red day.

And as much as you want to avoid those red days, they'll just still happen from time to time because that's part of the Dynamics of your strategy. My strategy is a little different in that I really need volatility and so if I have this extended period where things are really choppy I'm not having big red days, but I'm also not having big green days and so I'm just kind of going sideways. going sideways, going sideways. I Don't really like that too much either.

In some ways, it's more exciting to at least be making really good progress and then, okay, you give back half of it. but at least you're making really good progress. For me, going sideways gets a little bit. You need to start getting burnt out just going sideways, but as a momentum Trader for me, if I'm not seeing really clean action and I've got a lack of conviction I have to reduce my size.

If I reduce my size, my winners are going to be smaller. So for me, my accuracy because I'm buying stocks that are high ends up being lower and because I keep pretty tight stops. That brings my accuracy down as well. You know someone could have in theory 100 accuracy if they're super stubborn and never cut losers, right? If you never cut your losers, then you will not have losers.

I Suppose until you end up with one stock that gets so far out of control that like it, it could end you. Which you know. You look at the HKD type of stock and you know that's what that's That's the possible downside. So you know I Think regardless of the strategy you trade, if you're a short seller and you're doing short scalps and you're adding higher, adding higher, adding higher, adding higher.

you just know that part of that strategy comes with it that add higher, higher, higher, higher higher works until you have the one that just keeps going and you can't keep adding because you ran out of buying power, you ran out of shares to borrow and you are you're You're out and that's it. And so that's a downside to that strategy, right? Uh, if you're a Momentum Trader A downside to the Momentum strategy is that if you're seeing dispersed attention across the market where one stock is strong and then it kind of Fades and then another strong kind of Fades, you're not seeing enough conviction any one stock that you're having multiple legs higher. And so today, for instance, on Ph SV Phsv. This is one of the ones that I traded today and I did okay on it.

Uh, Phvs sorry. So on this one today, it really. I mean this is very choppy, right? This was not clean. I I had a little trade on it.

um, pre-market in this area that was okay. Came back up here, but you know this is like not sustained momentum. It did not hold up. however, you know if you look at it yesterday yesterday, it actually was pretty clean.

So this is the type of stock that I'm going to typically be able to do better on when you've got these longer periods of momentum. But listen, this is a stock that went up 100 in one day. That's bull market stuff in a bear. Market You don't see a lot of that in a bear.

Market You might see 10, 15, 20. just enough to short, short, short, short, and then cover on the way down. So I think that the um, the the shorting tops definitely is a strong strategy in a bear. Market When you're not seeing conviction, you're not seeing individual stocks making big moves.

But the inherent risk with it and challenge is that you never know when one's going to do something like this and go up 50 or 100 or like am am and go up a thousand percent. And unfortunately, especially when it coincides with these low liquidity traps and these halts and these gaps higher these Gap High gaps higher you run into a position where it can be really hard to manage risk on it. And so you know, like anyone, you start to learn within your strategy what are the types of stocks that that risk is going to be higher on that I therefore have to be more cautious on and what are the stocks where I can have a little bit more conviction that we're not probably going to see something like this, but it can be hard to know it can be. It can be really hard to know.

So this was a 38 million share float. the float was a little higher. Typically those higher floats, you know don't end up giving us. um, you know this kind of move.

so I didn't see this coming at all. but you know I traded it a little bit on the way up and and hopefully you guys got a piece of it whether it was long or short. Hopefully you came out with some profit, but you know if you came out on the wrong side of it, definitely look back at your trades and you know, ask yourself what you can do to try to tighten them up and either get better entries or cut the losses a little bit faster. So I hope this has been interesting.

I Wasn't planning on doing any episode today, but this was just such a wild move. I Thought I might as well record it, upload it and you guys can watch this for um, months and years to come. So hope you find it helpful and I'll see you back here Monday morning for the morning show Tuning in? Um I hope you tune in right around 9 A.M I'll be live streaming all right I'll see you then a reminder. As always, trading is risky.

My results aren't typical and there's no guarantee you'll find success. Whether you trade on your own. you'll learn from me, so take it slow. Hey I Want to thank you for watching this episode I Hope you really enjoyed it! This channel has crossed over 1 million subscribers as thanks to viewers like you.

If you want to check out a couple other episodes that other Traders are watching, you can see them listed right here. Thank you as always for tuning in! I Hope you subscribe to the channel.