From $3.00 to $9.00 in 45 minutes! SHORT SQUEEZE transcript

All right, everyone. Well, we're going to jump into it. I've got a case study for you today. SGBX, it's up over 150% this morning on breaking news. This is a short squeeze. This one is really impressive because we got the initial move up, it pulled back a little bit, and then it punched higher. It pulled back a little bit, and then went higher, and again higher. We've had three big breakouts on this today. So, I crossed over my daily goal.

This was a great way to finish the week, and let's go ahead and jump into the case study. So, SGBX. Now, this one popped up yesterday, and I'll show you the chart on it. But, this morning at 9:00 a.m. it hits my scanner at $3.14. As soon as it hit my scanner, I I I mean, I already knew the stock because I was watching it yesterday, and so I jumped in with my first position at $3.17. What I knew about this already was that I liked the price.

I liked the float. I liked the relative volume because of the move yesterday. I liked that it had a catalyst, and I knew that this had the potential to have a big day today because of the daily chart. So, the daily chart on this Uh so, by the way, I checked the news. that we had a news catalyst, and I didn't need to learn a whole lot more about it other than just to see that there was a valid news headline. I saw that we had news, and I was like, "Okay, that's enough for me." So, looking at the daily chart, this is a stock that had a reverse split uh just a couple days ago back here, and then squeezed up yesterday.

But, it didn't hold that level very well. It squeezed up and then dropped back down. So, the daily chart on it nonetheless was showing some resistance around six, and then room up to the high of this candle, and then about, you know, a decent amount of room up to the 200 moving average, which is around $10 a share. So, this is a daily chart that we would say has been beaten up. The stock is sold off quite a bit over the over the last year.

We had a really big move, but it retraced. And since then we've had a couple of pops that retraced, pop, retrace. And so, I I think, you know, rightfully so traders were a little cautious about this. But, this morning as soon as it popped up, it started to move. Now, the thing that I was thinking about is that what we often see with these small cap companies is this pattern where they'll do a reverse split, the stock then goes up based on the ratio of the split.

So, let's just check Now, I can't remember what the um ratio was on this one. So, we'll pull up um the chart here. So, this ratio split was 20 to 1. So, that's very common, a 20 to 1 reverse split. So, the price went up by a multiple of 20, the float went down by a multiple of 20. Right now, we're sitting at 175% on the day. I'm uh going to talk about why I'm not trading this right now. It cuz I could, but I'm going to talk about why uh in just a moment.

So, we've got the 20 to 1 split, and what typically happens with these is you have the split, company puts out news, the stock goes up, and then they do a secondary offering. They sell more shares, the float goes back up, and they do that to raise money. So, it's it's kind of a strategy that they'll do the reverse split, they then put out some really good news headlines, the stock does squeeze up because active traders are buying it, they see a stock with news.

Because the float is so low, the imbalance between supply and demand quickly leans to the demand side, and you get this big move. 175% already today. And then, news of a secondary offering. They sell shares, they raise money, the stock declines for a while, but they've raised some money, so they continue to operate. Now, hopefully, they're able to turn the corner and become a more profitable company, in which case they won't need to continue this pattern of reverse split secondary offering.

But, if they're not, then, you know, in the future there might be another reverse split, another offering, etc. So, it it doesn't surprise me to see the stock going up. Um it's sort of in this context here. Uh so, let's see. Um Okay, so let's jump back onto the slide deck here. All right, so, when it first popped up, because I was so familiar with it already, I just took a starter of 500 shares at 317 with a stop at three.

I was risking 75 bucks. I was just like, this is a stock that I think it's going to probably make a big move. Now, part of that calculation was the fact that nothing else was strong today. So, even though we've had some news headlines pretty much every day this week, I haven't had any big wins this week. It's been a little cold, the market's been a little cooler. We've seen some pops and nasty rejections. So, to be honest, my expectation for today was super low.

I didn't think we were going to get much. It's Friday, going into the weekend. I didn't think we were going to get any big headlines. So, I was content for today potentially to be a no trade day. And because this is the third day at the beginning of the new month, what's really important for me right now is building my cushion. Now, some people would say, "Ross, you're already up 200 grand or whatever it is on the year.

Who cares about the fact that this is the beginning of the new month?" But, the way I think about it, when I started trading, I was focusing on producing income consistently. My goal was $200 a day, and it didn't matter if I was already up 30,000 on the year, I still need to keep my head down and keep focusing on 200 a day, 200 a day, 200 a day. I couldn't afford to take big risks. Cuz when big risks don't pay off, you get a big strikeout, a big loss, and that can be really devastating, and emotionally it could be a huge setback.

It can hurt your confidence. And then that can cost you for for weeks, if not months, if you have a real setback in confidence. So, it's the beginning of the the new month. I want this to be a green month. Typically, each year I'll have one red month, maybe two at most. I don't think I've had more than two red months since I turned the corner and became profitable. So, you know, having one red month is, you know, whatever.

Having two is is enough for me. And so, I'd like to avoid that happening this month here in May. So, the sooner I can get myself kind of in the driver's seat, get a cushion, the better off I'll be. And that starts by hitting base hits, right? Small winner, small winner, small winner. So, I had a green day on Wednesday, I had a green day on Thursday, and I've got a green day today where I'm above my $5,000 daily goal, which is great.

I don't need to push for more, and I don't want to push for more because I don't want to lose what I've already got. Okay, so, my initial starter of 500 shares was conservative. I added at 323 and 339 because basically, as soon as I got in, it was like volume was coming in quick, this thing was squeezing up. I add more shares at 359 and 360, 363. Then I take a little profit off the table at 361. I I felt like maybe I added too high.

Took a little off at 361, and then I added back at $4. It goes to 420 to 430. It ends up hitting a high of 440. I add back on the dip, and then it goes up to 450, and it hits a high of about 454 right here. So, in this first little leg up right here, I made about $1,500. $1,500. Now, those of you who have been following my strategy for some time uh know that I've adopted this new technique of scaling into the day, where I start the day with a max position of 5,000 shares until I have first broken Excuse me, over $1,000 of profit.

And so, I did that uh today, the same as any other day. Although, uh to be honest, uh these trades were small size at the beginning of the move. The volume was kind of light, and I wasn't being super aggressive. So, anyways, nonetheless, I was trading with with somewhat small size, but as it moved higher, uh once I crossed over $1,500 of profit, that's when I said, "Okay, I'm going to lean in here, and let's let's see if I can get something really nice." I ended up locking up $5,360.78 on this stock.

We had the first move to 450, and then we pulled back quite a bit. And then we ripped here up to 450. We broke through that level at the open, up to five, up to 550, up to six, and this is where I topped out and was like, "I'm I'm good." That was a great day. I'm impressed that it came back up here and even ended up going higher, but I was happy to walk away here. Now, one of the things that uh we talk about is the power of knowing when to quit.

This is a great book that helps talk about that, helps you get your head around it. Uh you have to have a strategy of knowing when to walk away. I maybe I walked away a little too soon today, but on the other hand, I'm walking away at my high of day. I've got a lot of confidence, I'm feeling good. And I knew that this carried the risk of giving us a false breakout. And what I want to show you here, um I'm going to show you a couple different things.

So, let's see. First of all, uh let's go on to the um the one-minute chart. Uh by the way, those of you guys who are tuning in, um if you've been watching some of my recent um episodes, some of my longer form episodes, and I hope you do watch those on strategy, uh you will notice in my most recent one that I uploaded, um and this was um right here. Let's see. How to win at day trading as a beginner in 2024. Uh this is a this is a solid episode.

It's like a mini class, it's an hour long. In the middle of that episode, um I gave uh everyone a link to do a two-week trial at Warrior Trading for 19 bucks. So, $19 is two-week trial, and any of you guys that want to do that, you're welcome to do that as well. I'll put the link in the description here, and I'll pin it to the top of the comments. So, if you want to watch over my shoulder for the next 2 weeks, it's $19.

When you pay $19, you're helping cover the cost of the market data that you will get when you're doing the trial. You're not even covering all of it. I'm actually going to be coming out of pocket for some of it, but it's fine. So, it's a 2-week trial, and what what I know is that a good number of you who do the trial are going to decide to become members of the community because you're going to love it. And those of you who don't, like it's no big deal.

It's I'm happy to give you a chance to see what the platform looks like. So, anyways, you'll have access to the scanners, the charts, the newsfeed, uh my chat room, and my broadcast. Uh and you'll have access to a few classes that'll give you kind of a sense of what it's like to be a member of the community. So, on SGPX, um on the 1-minute chart, actually, we'll go to the 10-second chart. So, we're going to really get into the weeds here.

I'm going to dial this in for you. Um so, we have this initial pop up right in here, where basically, you know, we have the breaking news, and this starts surging up. Now, I'm going to show you this in a second. Um this is something that we were uh talking about. It's uh it's called Bookmap, and I'm going to do a separate episode on that. So, right here, um let's see. We got this first move up right here up to 360, a little pullback up to four, a little dip up to 420.

So, this right here was a nice dip that gave us that push higher. So, if you missed this first entry, this was the next best entry right here. That micro pullback at 360. Then, after the micro pullback at 360, the next best entry was um this pullback here, and then that curl back up over four for the squeeze up to 440. And then in this area, as you could see, it was kind of grinding. It was a little choppy. And right here, we had a high of about 454.

Now, what I knew about this was that yesterday, we had peaks at about 450 as well. If you see right here, we had this high of about 450, double top. So, that gave me some reason to be a bit cautious. Um and it wasn't surprising that we topped out here. Uh on this candle here, you'll see how we pulled back and we came up and hit this resistance level of 454. So, we kind of ran right into it. And on the level two, there were a lot of sellers stacked up.

So, we had sellers stacked all up against this 450 level, which made sense because they were selling against that resistance. So, it ends up pulling back, and at this point, I thought, you know, gosh, I I'm not sure what we're going to do here because we had three three nice candles, but now look at all this selling. It's selling and selling and selling. And when we use um the let's see. Let me just grab my other um my other screen here.

Okay, so, when we're looking at um our indicators, what we had was this nice push higher, and then we hit two uh sorry, 454, we dipped down, we double top right here at 454. So, when we hit that level, um I actually pulled up the uh the level two. I was looking at the market depth, and what I saw was that there was a 20,000 share seller up here around uh 460. So, when I saw that seller on the level two, I just thought to myself, you know, this is this is going to be a problem.

Uh there's a big seller here, and I just So, for that reason, I didn't take this trade where we got this dip and this push higher because I already saw that seller was sitting there kind of blocking the way. So, I don't trade it at all in this area. I'm up uh about 1,900 on the day. So, I got myself up $1,900, just just under 2,000 on the day before this um this this final false breakout. And now I'm sitting tight, waiting, waiting, waiting.

And at the open, we squeeze up to 420, we squeeze up to 430, 440 right here. And this was the spot where when we came back up to 454, and we held above that level, and sitting at 450, what did we have at 450? So, 450, we had we this was the area where we came up previous day, we pulled back, we came up again, we pulled back, we came up, we got over it, and now sitting at 450, 20,000 share buyer on the bid. So, I said, you know what?

I'm going to get in here. I bought 1,500 shares. I tripled my position to 4,500 shares, and then it squeezes up to 465, 475. At that point, I said, you know what? I'm taking my max position off, and I added another 25 uh 100 shares as it squeezed through 75 and 85, getting myself up to about 7,500 share position. It goes up to a high of $5. It squeezes even higher. Now, let's look at the chart. It pushes up uh right here to 510.

I take my profit out right there, and that was a $3,000 winner. That was a really solid trade. It then dips down, I take the dip, I add back for the squeeze through the high, but this time I'm trading with smaller size as we squeeze up to a high of 615. Then at that point, again, tons of sellers on the level two sitting on the ask around six. It dips down here, we weren't able to break through that high. It comes down here.

We've got all these sellers sitting at six. When it comes back up to here, I still saw those sellers on the level two. And this is what I was afraid was going to happen. We started to accumulate. All of a sudden, we started seeing these buying buy orders going through, and what I was worried was going to happen was a jackknife candle. So, I've been um I've been using Bookmap as um kind of a test for the last couple weeks because I wanted to uh do a a YouTube episode about it because I a lot of people have been asking me and saying, Ross, you know, you should be using Bookmap.

It's a great platform, etc., etc. So, on the 1-minute chart, we had this move up to um $6 and this pullback. And so, on the 1-minute chart, this is starting to look like a possible entry. But what you see on Bookmap is this big sell order right here that's at 620, $6 and 620. See all those sell orders? So, these are on the level two already. So, if you're using level two, then you're seeing those orders. But if you're not using level two, you might not see them.

And even if you're using level two, you might also not notice them. And so, this visually plots those orders on your chart so you can see where you've got resistance. Now, again, I'm going to do a whole episode on Bookmap, so you guys should tune in for that. Um but I I would say the long story short takeaway is that uh it's a helpful indicator, but it's overpriced. It's too expensive. So, I probably wouldn't subscribe to it as a beginner trader.

Uh but in any case, I was able to see the sellers on the level two anyways. So, saw the seller at six, and so, I sort of thought this was going to reject, and that is what happened. We had this nasty uh rejection. We rejected, we dropped back down right here. It wasn't able to break over six, right? So, that ended up sort of confirming as resistance. But what ended up happening here was we came back up to six, and as we came up to six, all of a sudden, we saw a lot of buying right up at that $6 level.

Now, in this market, what I was sort of expecting would happen was we would hit six. So, we would hit this $6 spot right here, break it, and then jackknife back down to like 520. And that's a trade where if you're taking 5,000 shares for that breakout, you could easily give back half your profit. So, when it held, uh when it broke So, first of all, when it broke that level, and it goes to 685, I was shocked. And I was like, okay, I'm watching this for a dip.

But then it just kind of pulled back more than I thought it would. And I was like, hmm. So, it actually came all the way back down and held $6 as support. And then it rallied back up, and it rips up to a high of 769. But then again, it dips all the way back down to seven. And then it pushes here up to eight. And then here, we have a jackknife candle with a $1 range. And then we dip down, and we push higher. So, at this point, because we've now had a jackknife candle here, because we did have a pretty nasty rejection back here, I just feel like it's best not to overstay my welcome.

I I may be proven wrong on this, and since I made basically my full $5,000 of profit before 9:45, all of this since then, which is another 50% move, I've missed out on. Um but it's easy to say that I would have definitely been profitable when we know the reality is I could have also traded this whole move up and managed to lose by, for instance, taking my biggest position of the day right here at 8:50 for the break of 8:50 and then taking a one-point flush.

You do that with 7,500 shares, you're down $7,500. So, I hope this goes higher, but I also will recognize that the 200 moving average is kind of up in this area. Uh we're getting a little extended, and um and there is a risk that the company does a a secondary offering. So, I I this is one of those days where I'm going to say, I'm going to be grateful to walk away with $5,000 in my pocket, which is more than I had at the beginning of the day.

And I was pretty efficient with my time. There's no doubt there are people who have traded this from this first candle to right here who aren't up 5,000 yet, right? They've traded the whole time, but they haven't been as efficient with how much they've made. There's also going to be people who are more efficient, who trade with bigger size, who are up 25, 30,000 or more. This is a stock that right now, with 500,000 share float, has 62 million shares of volume.

The float rotation is 120. That is huge, and this is where we can see some really big moves. So, right now, we're sitting up 200% this could go higher but again there's just a question of how much do I want to push it? I'll say that this is the type of day that I should probably be leaning in a little bit more but because when it's hot these are the days you want to dig deep. However, something that happened on this one was after I got that first 2000 I had like three trades where I stepped up and then got out break even and I was like ooh that was close and then I got in and then stopped out break even I was like shoot.

I did that three times before I finally had that one that pulled away and because of that I started feeling like maybe I am pushing my luck a little bit and I'm going to do one of these and I'm going to lose 50 cents a share with 35 4500 shares and I'm going to be a little frustrated. So something I'm really working on is building that track record of consistency trying to keep myself feeling really confident and while it's nice when we go from really really cold to just having a stock go up 200% it also is a little difficult because you're not in the hot you know market mentality.

You're being conservative you're trying to take your profit not overstay your welcome and so you don't always fully capitalize when it's just sort of random like this. You'll do much better when it's consistently back-to-back hot hot hot and that's when I start having back-to-back $5,000 $10,000 $15,000 days like I did in February of this year and that's when I was able to lock up over $130,000 of gross profit. Right now I'm up 5300 on the month well today and then I was up a thousand yesterday and I think 2000 on on Wednesday.

So I'm I'm not even up $10,000 on the month yet. I'm still building my cushion. I'm still trying to get myself in the driver's seat. Right now is the time to be very disciplined. I do not want to overstay my welcome. I cannot afford the risk of having a big drawdown so I got to keep my head down and stay focused. Discipline is what will lead to long-term success as a trader. You will leave money on the table and that's okay as long as you're walking away with profit in your pocket.

So anyways if you want to join me for the next two weeks I'll put the link for the two-week trial it'll be down in the footer or down sorry down in the in the description and then pinned to the top of the comments and I want to thank you as always for tuning in. I hope you hit that thumbs up. I hope you subscribe to the channel. Make sure you stay tuned for more episodes on trading strategy that I'm uploading. I'll have an episode on Bookmap that's going to come up soon so you guys will enjoy that and I'll remind you as always that trading is risky.

My results aren't typical and there's no guarantee you'll find success whether you trade with me or you learn on your own. So manage your risk take it slow and we'll see you back here on Monday morning.