What's up, everyone? All right? So in this episode, I'm going to walk you through the craziest move I've ever seen. This is Cosmos Health and I've been trading for a long time and I feel like I've seen a lot of really crazy moves this year. I'm almost exasperated because it's so unpredictable I Don't even know what to think. It doesn't make sense.

The stock lost 97 of its value overnight and didn't even have bad news. This doesn't make sense. This shouldn't happen. It feels like it's a failure in the market making system.

It feels like there was a major oversight with some of the big broker dealers and people were locked out. They weren't able to sell positions and some people weren't able to buy positions either. and this shouldn't happen. I Don't understand why it, why, exactly.

but I'll walk you through. Uh, as best as I can understand it right now, what happened? And um, so this is a stock that does a reverse split and usually reverse split is a non-event I mean a traditional splitter reverse split stocks do splits all the time. It's just a trade of basically the number of shares and um, the the price of the share. So like Apple doing a seven to one split when it was trading at 700, you know that the day before is trading 700 a share.

The next day it's trading at a hundred dollars a share. And if you were holding a thousand shares at 700 a share on Apple the day before the split, you're you own seven hundred thousand dollars of Apple So when you logged in the next morning and it's trading at a hundred dollars a share, you might have been like oh my God. I've just lost. You know, 80 of my value on the stock.

But then what you would notice is that your actual average price is a hundred a share. It's one seventh of what it was before and the number of shares you're holding have gone from one thousand to seven thousand. So share goes down by a multiple and uh, the price and the number of shares you're holding goes up by a multiple. That's in the case of a regular split.

in the case of a reverse split. Like with this stock, they did a 25 to 1 reverse split. So the stock was at like 25 cents the day before and then the next day it's trading at that times 25. Whatever.

Whatever it was. Um, I Don't know if it was exactly 25 30 cents. but basically the next day it would be trading at. you know, eight dollars a share.

And if you had had a thousand share or ten thousand shares For instance, at 25 cents when you log in the next morning, you'd be like whoa, it's at eight dollars I'm I Finally got a big winner and then you would realize, wait a second. I'm only holding a thousand shares. Where did all my other shares go? Because whatever the split is, your shares go down by that amount. Uh, and so all of that requires a fair degree of coordination between uh The Exchange the actual exchanges NASDAQ but also market makers and broker dealers because they have to be able to do the swap with the number of shares you're holding and the average price and everything else.

And that seems to be where there were, um, some some errors or oversights or whatever you'd call them in the case of Cosmos. So what happened was, um, this is a stock that did a reverse split and they did that because in order to maintain listing with NASDAQ or Nicci New York Stock Exchange your stock has to be at least a dollar a share. And so if it goes below a dollar a share, you get a de-listing notice and companies don't want to be delisted and knocked down to the OTC markets and so short of just becoming more profitable and having their share price naturally go up. They can use a mechanism which is the reverse split and so that's what they ended up doing.

Now, they voted uh back on December 5th to do a split. Uh. However, what's interesting is that when they voted to do the split, uh, this was on December 5th, they didn't announce when the split was going to take place, they just did a vote. Uh, essentially asking if the board of Directors could be authorized to amend the Articles of Incorporation to affect reverse split of the company's outstanding stock.

And the the vote was uh, was yes. They had uh 37 percent of shareholders vote which represented a quorum. And so they voted yes, Uh, and then that was it. Now, apparently.

uh, the day before yesterday, some Traders noticed on NASDAQ that NASDAQ was reporting that this stock was gonna, uh, go. the the 25 to 1 split was going to go into effect on Friday but that was not. That didn't coincide with a headline that that I saw anywhere from the company saying hey, tomorrow the split's taking effect and there were a couple other changes that took place at the same time. They changed the name of the company from Cosmos Holdings to Cosmos Health and they changed the Q-sip number.

So you might not have heard of a Q-sip number. Um, it's C-u-s-i-p Some people might pronounce it cusp, but Q Sip number. And it's like a Social Security number for a stock. So every stock and Bond has a Q-sip number.

It's an identifying number and this is very, very important on the back end because when you're trading and you can see my actual trading log here from yesterday, this is the symbol and this is the Q-sip number. So it's every time you take a trade, it's It's coordinated there, it's there. it's included. So this Q Sip number is the new Q-sip number.

It ends in 305. that was Uh and we ended up seeing news that came out. This news headline was posted on um our Warrior API at 1106 a.m Uh, it said uh that there was a vote at the December meeting for the 25 to 1 reverse split right and they changed their name from Cosmos Holdings to Cosmos Health to better reflect their um what they're doing and they changed the Q Sip number. Okay, so this is where we kind of start to get into a little bit of a tangled web.

The problem was some people logged in and they saw holy moly this stock is at eight dollars a share. But because the change had not been communicated across all the broker dealers, their shares were still showing the number of shares they were holding at the previous price. So it's still showing they're holding it like 30 cents a share and it was still showing the same number of shares. so it looked like they were up 100 Grand or 500 Grand And so naturally some people started selling, they started selling.

Now this is going to be very confusing I don't know how they're going to unwind this but some people started selling but if, but of course they ended up selling more shares than they would have actually owned post split. So what happened was people start selling and market makers. As we know, market makers provide a lot of liquidity. When stocks are range bound, a market maker sits on the bid in the ask And they buy and sell their.

it's Arbitrage they they they buy from you and you want to sell and then they sell the next person who wants to buy and they profit from the spread. So in a tight Market they're churning a ton of shares and they're making a lot of money. But when the markets get really volatile, their orders back off, they start pulling away. And this is all done with algorithmic high frequency trading.

They they pull away those orders. So while they create a lot of liquidity in a range-bound market, in a market that has a lot of volatility, they actually amplify volatility because as they pull away their orders, people that accumulated during High liquidity environments now have large positions that they're unable to unwind because there's not the liquidity to buy or sell into. And so you start getting these really big swings. and that's what we had happen.

All of a sudden, the stock goes from eight dollars down to a low of three. uh, what was it? 460 right here? or 3 375. it comes back up the next morning. It drops on 600 000 shares from six dollars to 23 cents.

Now for people that sold at 23 or 30 cents, they're like, well, I you know I just sold basically what I was in at? No, not actually. that was because they were still trading based on believing that they had shares at the pre-split uh share size and the pre-split price not the post split share price and post split size. So what ends up happening is the stock starts to Rally back up here and so when I logged in at a I don't know what time it was but I logged in and it was already starting to squeeze back up and this is kind of what I saw I was like okay, we've got a reverse split and the stock dropped as this seems like an like anomaly. this doesn't seem right, but at the same time the market can be irrational longer than we can remain solvent.

So just because it doesn't seem right I don't want to think that I know everything. So I just started trading it cautiously. uh and some people were saying hey, by the way over at TD Ameritrade if you buy it you can't sell and I was like okay, well I'm on light speed and I that's actually knock on wood. It's never been a problem at Lightspeed So so I'm starting to trade it on Lightspeed and I didn't know at a time.

but I'm trading on uh, the cusp sorry the Q sip number that ends in 305. So that was the new q-sip number. But what people were saying and immediately TD Ameritrade was getting blown up on social media because you know TD Ameritrade is they're a huge broker and so of course so many Traders are using TD Ameritrade And so people start saying um, you know all of a sudden they're like some clients may be experiencing delays and receiving notifications. Please avoid duplicate orders.

There was an earlier issue with Cosmos today due to a split Corrections have now been made to allow for trading, but that was only sort of the case. They said there was a split. So this is the same. The same thing they're saying um so what What ended up happening was that, um, because of the change in the Q Sip number Uh, TD Ameritrade was saying that they wouldn't let you sell your pre-split shares.

So some people and and so some people, what they did when they logged in on Friday is they're like oh my gosh, I'm down because they knew that they were in and they knew there was a reverse split. So they were like I know I'm in at eight dollars and this thing's at a dollar a share I need to add to my position right? So they start adding to their position, but they're buying the new Q-sup they're they're buying on the 305, not on the 306 so they're not actually reducing their average. They base. they really have like two separate positions which is crazy should never happen.

So now people are adding to their position and then they go to sell it and the sell button's not working right? So the cell button's gone. So their TD Ameritrades are applying to all these people. They're all these people. They're like, um, you know some of them are saying uh, there's an issue but and they're like it's resolved.

But then they ended up realizing that it wasn't totally resolved. So let's see, we'll keep scrolling up. Um, so while new shares may be purchased existing Cosmos Holdings need to wait for Cosmos transfer agent to deliver their new shares. The anticipated delivery date is unknown at this time.

So what you essentially have are people that were in before the split. Some people with some Brokers weren't able to sell, which is good I guess because it dropped 97 so well it's not good. You should be able. You should always be able to sell.

But in any case, maybe it saved them from taking a massive loss. But then look what happened to the stock. It ends up going from a low of 23 cents all the way up to a high of 22 dollars a share, 23 Almost twenty four dollars a share. What in the world? And then it comes back down here to 7 15.

This is crazy and now it almost makes you wonder if did some people who sold into this candle could? Is it possible they could have put themselves short the stock without knowing it because their position showed that they were holding 10 000 shares but it hadn't been adjusted for the split I Don't know and then market makers are covering. You know, clearing firms are covering I have no idea I don't know I'm only speculating, but this this clearly shows how important it is when a reverse split is done that there's certain steps to make sure that the broker dealers are aware of it. market makers are aware of it, the exchange is of course aware of it. and and same goes for changing a Q-sip number because what you you almost have happening on this are like two buckets of shares.

You have the pre-split shares on an old Q-sip number and they haven't been merged in because they're separate at least. and maybe some. Brokers I I Did hear some people saying some Brokers like it may be Lightspeed is one of them uh I wasn't holding before the split but some Brokers did were able to merge them I guess but but a lot of these big Brokers Robin Hood apparently was not allowing trading for a good period of the day on it. buying or selling.

TD Ameritrade was allowing buying of the new Q-sip but not selling and you couldn't do anything with your old shares. And so you have all these people out there on Twitter and of course calling and complaining. They're like I can't I can't sell my position, What's going on? What's happening right? Trying to sell, trying to sell, can't sell. and um, you know, while the stock is tradable, waiting on the delivery of the post split shares will not be available to sell until the new Shares are received.

I mean this is like you know, this is great. This is crazy. So I'm not even really sure uh how they're going to resolve this I I Started wondering if they would break the trades because would they just do like control Z and like undo like everything from yesterday. And naturally for people that made money on it and I made a little bit of money on it, you know that would feel disappointing to have a winner taken away, but more importantly, protecting retail traders who seem to get raked over the coals or so we feel sometimes by the the dark pools.

the payment for order flow The High Frequency trading algorithms and then yet again another screw-up that potentially could have devastated some people. So I care more and think more about the people that could have been devastated by this who might have sold or might have been in it on margin and got a margin call or something and got stopped out. got Auto liquidated I don't know and then then I don't know it, just it that just doesn't seem right now. if you lost because you were day trading it in this range you know I mean that's I think that's on you.

that's that happens and I could have lost on it. Also, in fact the choppiness that was around five dollars a share. um if we zoom in on this like right in this area. It kept doing these like really nasty bull traps where it popped up and dropped it, did it twice before it started to pull away and I was trying to get a headache and I was like I don't know this is this is just crazy I can't even I don't even know what to think on this.

But anyways, um I I'm definitely I you don't like to see this kind of thing happen. Um, so you know just this combination of name change Q sip change and reverse split. the seeming lack of following the standard procedure whether and I don't know where there was a lapse if it was on somewhere in the market maker, somewhere in the broker dealer. I Mean it seems like there was several points of failure here, but I don't know if they'll be able to sort of pin it down to one individual point that resulted in this, but boy, um, from a low of 23 cents to a high of 22 dollars, that's a ten thousand percent intraday return.

I See a couple Traders mentioning um, you know, green on it and this and that? It's great. You know? for those who are day trading, there were certainly opportunities on it. But for people that were in before the split it this, this could have been a disaster for people who are short if 15 of the float was short. So for people that were short before the split I mean at first it might have seemed like a 98.

Uh, like it's down 98. It's a huge winner. and then on the other hand, um, it ended up going up from the from the split uh, price of eight all the way up to 24. So whew? I Don't know.

So for those that traded this I would love for you guys to leave some comments down below and just tell me what your experience was. I Heard there was also some issues with the stock NH Some people were saying and I didn't see this myself. but some people said that they tried to buy Cosm at their broker and they got filled shares of NH and they were told that the transaction was that Cosm was merging into NH but that was not true. That was just because of an error on the Q-sip number.

So I don't know if anyone had that happen and wants to share that traders who were Robin hoodie, what do you think caused this? I Don't know, You know some people were talking about this being some you know, crazy short squeeze or naked short? you know phenomena. I I Don't know that I see that in this because um I mean while certainly shorts would have gotten squeezed out who were in it down here? Uh, the fact that it dropped 98 first is what just seems really odd. And I don't know how they're gonna unwind and merge in all these shares, but the problem and maybe some of you had shares before the split. You can comment on whether or not and at what time you were able to start selling, but it makes me wonder whether or not.

um, we're going to start seeing selling because that's what I was worried about I was thinking okay, especially at the open yesterday when it first started trading I was thinking well, I better be careful on this because people that were not able to sell this issue you know may be getting worked out And so people at TD Ameritrade who bought on the new Q-sip number eventually we're able to sell. So for at first they bought even on the new Q-sip and they couldn't sell but then that was fixed So then those people were able to sell. So I was a little bit worried when we had this sell-off here from a high of you know, four all the way down to a low of like 270. I was thinking okay, here's the selling coming in but then it came back up but then you had these big red candles and I was just like I don't know, this is weird.

this is really weird and I started thinking is this just gonna go back to eight which is the the correct, um pre-split price and in fact it did, but it didn't stop there. It then started to squeeze out which I don't know. It made me wonder when I was trading under the new Q-sip after I realized this after the fact. who are we trading with? Where What shares were we buying and selling? Was it from the very small number of shares that maybe did get properly converted or were we just trading against nothing? I I don't even know.

it was so weird. So it's a little concerning. uh an NH yesterday. you know equal did something kind of similar where it dropped here from 350 all the way down.

but I think this was I and they also had a reverse split. um but I I just I I don't know. So there was some really strange stuff going on. um and I don't know but you know I see the news here.

So they they put out the news of the split. um and they put it out the day before the split. so I don't think that this I think they it appears that they communicated this correctly. um that was on NH So I think maybe it was the part of the Q-sip issue.

Uh so yeah you could. You could look in your trades and see which Q sip you're actually trading. Uh, whether you're trading the old ticker the new. but I think everyone was trading who was trading yesterday was trading on the new and people who are still have shares on the old are either going to be waiting to get those freed up so they can exit their positions which at one point was up 300 percent.

There were people posting that you know I'm up I'm up Huge amounts of money. You know you're up 200 on a position and I can't sell. What's the deal? Come on TD Ameritrade Come on Robin Hood I Can't sell so crazy stuff. All right.

Well leave some comments down below. let me know what you think. A reminder. As always, trading is risky and it's risky for a lot of reasons.

but anomalies like this in the market can create a lot of risk because the market does something that is really unexpected. So this is a it seems like an inefficient uh we had we had a lack of efficiency yesterday. Uh, the prices were not really a correct reflection and this this was a bit of a Black Swan So days like this, if you were shorting it I mean think about it. think about that for a second.

What? if you shorted 10 000 shares of this dollar be down 200. Grand All right, so don't forget that. this is the risk of course. Short Selling is that you can lose an infinite amount.

and let's not forget about HKD You know the stock that um and I you know did a lot of content around this one. Um, just recapping this crazy move but you know this thing went from. it's unbelievable. From 15 a share or so, it's a 600, 700.

It keeps going guys. two thousand 550 and 30 cents a share. So be careful. those of you who are trading the short side of these stocks, you've got to manage your risk.

but those trade in the long side you don't want to get caught holding too high. So this all comes back to managing risk. We actually had a great session with Ted and Diane yesterday they they do the trading psychology at Warrior because we know how much of trading is. you know a head game how much of it is up here.

Uh so we had a great uh, a great session with them on Friday the Friday 1 pm fomo Friday sessions that they do and we were talking about how to be a responsible Trader in these really difficult markets when you're seeing irrational price action and you feel Fomo and you want to chase it. but it's like you see some people getting rewarded for chasing but then other people getting really you know, burned from it and this is a really hard market. So I want you know you're not alone starting in January we're gonna do and we did this last year. Also, we're going to do, um, a two-week trade or rehab.

uh session. Uh I put myself in Trader Rehab many times. So um anyways, two week Trader rehab session it'll be led by Ted and Diane and um I It'll correspond with the trading Rehab course that we taught, so it'll be reteaching that and um, to a certain extent and then doing uh, daily sessions to really try to help people get 2023 off to a good start because there's no telling that 2023 is going to be any cleaner any easier than this year. This year wasn't easy.

It was very difficult. It was A it was not has not been a good year from me. This has been very hard. It's has not.

this just been extremely volatile, unpredictable, crazy stuff. and that's difficult. So if you're there, you're not alone. Uh, we'll We're going to be doing some work around this.

um, this. Challenge and trying to encourage you know all of you guys to manage your risk. Trade, responsibly, be cautious, practice in a simulator before you put real money on the line and don't try to blindly follow me or anyone else for that matter. Trading is risky, so take it slow.

all right. Thanks as always for tuning in. I Hope you enjoyed this episode and please leave some questions and comments below. I'm excited to see what you guys have to say.