It Only Takes 1 Good Trade... transcript

What's up, everyone? All right, in today's episode, I'm going to break down my trades from the morning. We had a couple of stocks today that put in some decent moves. One of them was straight off the watch list I uploaded over the weekend, but a couple others were surprise stocks that came out with news this morning and ended up squeezing up. RDHL was one of them. It's currently up 78% right now, down a bit off its highs.

So, this stock ended up squeezing up over 225% as you can see right here. This one green candle has over 10 million shares of volume. So, this thing basically, like, was off to the races really fast. The problem when that happens is that sometimes the move is so quick that the only way to trade it would be just to jump in in the middle of it. And while there was a couple, there were a couple little opportunities, there was a spot I was watching.

I ended up not taking it, and it ends up going without me. So, here's the deal. RDHL ends up popping up this morning on breaking news. It's a biotech stock, and they have this headline that they've sold divesting, you know, something that they've owned for $18 million up front. And the stock immediately starts surging higher. So, I'm like, okay, there is a catalyst. Goes a dollar 10, dips down, rips up to a dollar 40, dollar 50.

Now, as it came up to a dollar 50 right here, there was There was like 80,000 share seller on the ask. And it got bought up, but I was like, "Yikes." Someone is excited to sell. Whether it's a short seller or someone who's been in for a long time, I don't know, but they were within, like, 30 seconds of the news coming out and the stock popping up, they were selling. So, then it goes up to a dollar 80. It pulls back, it pops up, does a little pull back right here to a dollar 90, and then pushes over $2, ends up going to a high up to 220, and then rejecting back down and then it starts to show weakness.

We had more big sellers that were coming out and at that point I was like, I don't think this is going to work. And someone asked, Ross, how is it that a stock with a, you know, 5.9 million share float has become so thickly traded so quickly? So, here's the deal. If you have a stock that's squeezing up on breaking news and there's tons and tons of buyers, the price will move very quickly. If you have a stock that comes out and it has bad news and there's tons of sellers, the price will move very very quickly.

But in the case of something like RDHL, news comes out, the price squeezes up, there's lots of buyers, and then it kind of stops going higher. Why? Because sellers are coming out. Now, sellers are holding it back. And those sellers can come from a couple different places. One, it could be insiders with a company who want to dump the stock. They want to get out. Number two, it could be the company themselves selling shares to raise money, which we'll find out later when we get the filing that they've performed a secondary offering.

But in real time, we don't know that that's happening except by interpreting maybe that that's why there's so much selling. Number three, of course, short selling. And naked short selling is not, you know, excluded. So, both legal short selling and illegal naked short selling, these all create more selling pressure. And so now you have a stock that's up 150%, whatever it is, but it's not going higher because sellers are holding it back.

Now, buyers are continuing to hold it up because they like the stock, they think it has potential to go higher, but at a certain point those buyers give up, they bail out, and combined with the increased level of selling already from the from whatever the the source is, the stock price declines. And so RDHL now is on the decline and no one's going to buy it here. Now it just looks too weak. So, short sellers kind of win in this area because now the pattern, if there was any bullish pattern earlier, it's broken.

Anyone who bought and was holding and hoping it would go to three or four dollars a share is going to be giving up hope and selling and the stock just ends up fading. So, RDHL um I didn't take a single trade on. I was watching it. It went without me and I just said, well, you know what? That's the way it sometimes goes. Here's another one I didn't take a single trade on, WETO. It's hitting our scan right now as it goes up to $11 a share.

I didn't get any trades on this one and I don't feel too badly about that because if you look at this chart, this is a stock that's been selling off for quite a while. We had some good moves on it back in, you know, mid-August. We had this squeeze here from $8 all the way up to 52 and then we had this descent all the way back down to six. So, it pretty much gave back all the gains. Now, today it bounced up right here for one candle from 750 to 850 and then goes back down to seven.

And that to me felt like a trap. It popped up a little bit, some long traders jumped on and then shorts hammered it back down and it flushes. Then at the open it rips back up here. Uh, I'm not really compelled to trade something like that. I feel like it's on the backside of this big move from August 17th. It's a little bounce off the low. What's the total upside potential? I find it to be generally pretty limited in this type of scenario and so I didn't go for it and yeah, I don't feel badly for missing that.

I don't feel that I missed it. I feel that I chose not to take that trade because the risk and reward just didn't add up. So, that was WETO. No trades on that. Then we had XAIR. XAIR pops up and this one has FDA breakthrough designation. It squeezes up and comes all the way back down. Full round trip. It's now down 5% on the day in spite of breaking news. Now, again, there's only a couple things that can explain the company putting out positive news and the stock price being negative.

Number one, the company itself selling shares as the news comes out on a high volume day to raise money, which they can then put on their balance sheet and allow them to be better capitalized to continue their research and development. That's number one. Number two is institutions that have owned the stock for a while or participated in previous private placements or secondary offerings own shares and are selling them on the open market on a day the stock pops up.

That's possible. Number three, short selling. Number four, insider selling. Now, insiders do have to be a little bit careful selling. There's lockout periods where insiders are not able to sell right around news because of course they know you know insider information and so there are restrictions around that. I worry about that more with foreign listed securities, especially Chinese, Malaysian stocks that may not have people that follow the rules, but I don't worry about it as much with US publicly traded companies.

And Beyond Air is a US company, so for whatever reason, the stock ends up doing this reversal. And you know what's interesting is that the XBI, which is the biotech ETF, is actually having one of its best years in the last decade. I mean, it's having a really good year. The ETF is up in the last 18 months like 200% over 200%. So, biotech is hot right now. Biotech sector across the board. Individual biotech stocks, obviously, are leading the way.

Not all of them will and all of the small cap ones, some of them will fail. But this year we have seen a number of really nice biotech stocks and so this is something that I'm definitely paying attention to. Uh but I'm also, you know, not trying to fight the the momentum. If something's not working like XAIR, I'm just leaving it alone. So, on this one, it comes out with breaking news. It pops up. I have my hand on the buy button.

I'm watching it. I'm watching at 5:50, but the volume's a little too light right here. See how the volume was building up? But even right there, the volume was still less than half a million shares. So, I was like, "I'm not sure if I can trust this." As quickly as it pops up, it could drop right back down, right? A big seller comes and just pushes it down, and it could be the end of it, and then the chart's broken, and I'm in too high.

So, I wait, I wait, I'm watching it here, comes back to 6:50 right here. It pushes a little higher, I missed that trade. Again, hand was on the buy button, but I was like, "Uh, do I really want to buy it at high of day? Volume is still pretty light. I don't." Pulls back, I'm like, "That's all right. If it's a really strong setup, a really strong stock, I'll get another setup." And I didn't. And this here, this sort of liquidation, this big flush, um, interestingly, this stock was on short sale restriction.

So, that big flush there that we had on the 1-minute chart was not from shorts hitting the bid. Shorts could not market this stock and, you know, bury it because it was on short sale restriction. So, all of that selling either came from long buyers who bought in this area and bailed out here, the company itself selling, you know, institutional investors that have held it for a while selling, or you know, insider selling.

You know, it's one of those scenarios, and we're not sure which one. We can only speculate. So, XAIR ends up failing. All right, so now I've got a couple failures in a row. We had NCRA, this one popped up earlier, ends up failing as well. It's rallying up now, but I wasn't not interested in it. And so, none of these stocks were really that great. COOT, this is one of the ones on the watch list, Australian from Friday.

It was gapping up on Friday, ended up kind of selling off a bit. But AEHL, this one, um, I did trade, and this one has this after-hours move on Friday. It's a Chinese stock. And basically, I was skeptical about it, but this is the way I approached it. I saw that we had this move on Friday, of course, and then I noticed pre-market that we were kind of basing out in this area. So, we had popped up at 4:00 a.m. and sold off, came back to VWAP and rejected, back up and rejected again, then we come back up here and we break through.

And so, I ended up jumping in as it squeezes higher right through here. So, this is my trade. I only took one trade on it, and I'll hide my video so you can just see those um orders. So, I was in at 662, 669, and 682 buying as it was squeezing up here for the break of seven. It breaks seven, hits a high of 709, doesn't hold, comes back down, and I'm selling it for about 11 cents per share of profit on 9,000 shares. $975.63.

That was not a very exciting trade. It ends up selling off, comes back up here. I don't trade it because now at this point I'm not sure I can really trust it. I noticed that we have um you know, sort of this uh this is a channel that I was sort of drawing here, but uh you know, we had this um sort of peak here with a topping tail, a big topping tail here. So, I didn't trade it in there. I didn't really trust it. And you know, I sort of felt like maybe I was leaving money on the table, but at the end of the day, August has been a roller coaster.

Two of my biggest red days of the year, couple big green days, and so today finishing the month with a small green day and no trades in the small account, I'll take it. It's the end of August, September begins tomorrow. And so, for those of you guys who've been watching over my shoulder and thinking about how you can be more active in the market, I'd encourage you to check out our 2-week trial. We also have our Labor Day sales running right now, uh but you're welcome to begin the trial at the very least, 2 weeks for 20 bucks, and that gives you this week to be in the chat room and see what it's like to use this software right here for charting, scanning, and breaking news.

What it's like to go through some of my classes, to listen to my market commentary. And if you decide you like it, then by the end of the week you can join using the Labor Day Sale coupon code. And if it's not a good fit for you, then you know, the 2-week trial doesn't auto renew into anything. It's just 2 weeks for 20 bucks. You cover your market data and some of your server costs and, you know, you get what you get out of it.

So, I hope you guys check it out. I'll put links in the description for both the Labor Day sale and the 2-week trial, and I'll be back at it first thing tomorrow morning, streaming at 7:00 a.m. Eastern Standard Time. So, I'll see you guys then, but I'll remind you, as always, that trading is risky. My results are not typical, and there's no guarantee you'll find success whether you trade with me or you learn on your own.

So, please manage your risk, take it slow, and always practice in a simulator before putting real money on the line. With that, I'll see you guys back at it bright and early tomorrow morning.