There's ONE Stock On Watch for Monday transcript

What's up, everyone? All right, in today's episode, I'm going to break down my day trading watch list for Monday morning and the game plan for the week ahead. We had a few stocks that squeezed up in the after hour session on Friday, and so those will be the first stocks we look at for a potential continuation into Monday morning. That has been working fairly well. A stock squeezes after hours, it continues the next morning.

However, it's been a little hit or miss whether that stock continues and maintains its status as the number one leading gainer, most obvious stock for the whole day. It often does continue a bit further, but then sometimes there's a second stock or third stock that pops up and sort of displaces that after hours gainer as being the most obvious. Maybe the after hours gainer was a little higher priced to begin with, and so when this new stock pops up, traders are more inclined to jump over to it.

So, we are seeing a little bit of this musical chairs where we'll have one stock that everyone's focusing on, and then, you know, everyone forgets about that and switches to the next one. And then everyone forgets about that and switches to the next one. So, it requires you to be kind of nimble, and one of the challenges here that I'm having in this current market is that it's not totally clear to me which stock is going to end up making the three, four, five hundred, maybe seven hundred or thousand percent move, and which one's going to pop up and then slam back down.

And so, there were a number of stocks I traded last week, and I was frustrated with myself because, you know, I just felt like I sold it too soon, and the stock did end up going up a thousand percent. And then there were a couple others where I sized up thinking, "Okay, this is going to be the one." And it just does a huge rejection. This is sort of this the current state of the market, and the reason is because in this current hot cycle that we're in, traders are very aggressive and jumping on anything that's moving, but there's not a clear theme that ties together all of these stocks that have made big moves.

A lot of them have been Chinese with no news whatsoever, but not every Chinese stock with no news is making 1,000% move. So, it's been a little bit difficult or very difficult to figure out which one is going to be really obvious. And so, the the sort of best approach right now is kind of testing the water, building a little bit of a cushion, and then if the thing keeps holding up, it's like, all right, it's holding up at 100%.

That's good. All right, I'm going to keep trading it. Then it's holding up at 200%. All right. And then it just sort of keeps going higher and you just keep trading it. But, it doesn't seem realistic to get in and then not taking anything off the table hoping it's going to go up 1,000% because although that's been happening, more of them are popping up a little bit and then rolling over. All right, so let's go ahead and jump on to the screen share.

Now, if you tuned into my recap from Friday, you know that Friday was my biggest red day of the year. This is where I finished last week including uh both my small account challenge at um thinkorswim and my uh Roth IRA. The small account challenge um you know, I I don't usually include it here. Uh this will be the first week I have, but I imported all the trades for the day 30 uh recap. So, we'll just pull this back and just look at my uh Roth IRA for right now.

Okay, so the Roth IRA, I finished the week last week up about $25,000 give or take. So, let's This is August. Um so, yeah, about 28,000. That's even a little bit better than I uh realized there. But, nonetheless, um so, 19,000 on Monday, nothing on Tuesday, no trade day, and then Wednesday and Thursday were good, and then Friday was just horrendous and gave back way too much. Um you know, this was just started red, went to green, and then just got smoked on that trade on DSY, and then it just got worse from there.

So, right now I am in a drawdown, a $73,000 drawdown. It happened very quickly. Um and so that's where I'm at right now. This is going to require some thought because what I don't want to have happen is have another $73,000 red day or gosh, an even bigger red day. Uh so typically what I do after a big red day like Friday, and this applies for any of you guys who are red right now on the month of August, whether it was a big red day or small red day, it doesn't matter.

If you're red, this is the way I approach it. The um the worst thing that can happen is that you end up having consecutive red days in a row where you just keep losing more and more and more. You don't want to do that. Now, if the market ends up, you know, cooling off, uh Friday wasn't exactly cold. I just kind of was mistiming and mismanaging my trades. Uh we did end up having stocks that made big moves, and I just didn't trade them well.

But if the market does cool off, then what should I do? I should absolutely reduce my share size and I can reduce the number of trades I'm taking by focusing on the highest quality setups. By doing that, my accuracy will improve, I'll avoid some of those outlier losses, and although I'll be trading with a smaller share size, I should be able to lock up a couple of small green days. And then once I've recov- recovered or recouped about half of the loss, the drawdown, that's when I kind of start to take the training wheels back off and go back to full-size positions.

So, the logical thing for Monday morning is for me to start with smaller positions to build a cushion, kind of get a feel for things, break the ice. And if with smaller size I end up going red on Monday, then it's like, "Okay, whoa. All right, so the market's not better or I'm not better, you know, in sort of being centered and calm, cool, collected. And so let's just stop right there and only lose at the rate of 1/4 of full position size rather than full position size." So, tomorrow morning is all about breaking the ice for me.

Now, that's generally a good rule of thumb even if you're in the middle of a hot streak, but I will say that when the market's really hot, I do tend to start right out of the gate swinging hard because my accuracy has been higher and I've been seeing, you know, bigger winners. So, that's what I need to refrain from tomorrow is just don't swing hard on the first trade. Instead, kind of build a cushion and get a little bit comfortable and then start to size up.

Uh so, that's really the the best approach because if I continue to trade with full size right out of the gates, um the upside potential is that I could end up, you know, potentially making back half the loss in just 1 day or or maybe even, you know, making back more than half of it in 1 day. Now, my biggest green day in the last like month was about 73,000, 60 72,000 here and 62,000. So, to lose 73 in 1 day, it's very unlikely I'd be able to make that all back in 1 day.

It's not impossible, but it's not but it's not likely and I shouldn't be aiming for that. Instead, I should probably aim that it'll take probably 3 days, 4 days to make back the loss. And so, if I can finish this week up 75 to $100,000, that would put me in great shape. Uh I'd have recouped the loss and I'd be back to, you know, pretty solid position for the month of August. So, that means just 20 that $20,000 days, you know, $25,000 days roughly um and maintaining good accuracy and sort of sticking with that.

So, uh yes, the upside if I trade with big size would be that I could make back the loss quickly. The downside, though, isn't just that I would lose more money, it's that I would lose more confidence. And when you start losing more confidence, that's when things start to get really bad. So, my confidence on Friday was obviously shaken a bit, um but I think if I can self-correct quickly here by not letting that spiral into multiple red days, that I'll be back on track pretty quickly.

All right, so that gives you a summary of kind of my approach going into Monday morning. Now, on Friday, we did have YJ, uh which ended up making a big move from $2 to $14 a share, and then it came all the way back down to 274. So, in terms of percentage return, this did go up over 1,000% on Friday. What's the catalyst? There was none. It was a Chinese stock with no news. >> [sighs] >> Uh all right, and it traded on how many shares of volume?

Uh 51 million shares of volume. Now, in hindsight, you know, if I had stuck around on Friday, could I have bought, you know, $100,000 worth at two and, you know, sold it on the way up to well, whatever? Technically, yes. Would that have been a good idea? No. It would have been very risky. And you can see how this started on lighter volume. Yes, the volume increased, um but lighter volume with back-to-back halts definitely makes it hard to manage risk, and you can get caught in a halt going the wrong way, and suddenly you're in too high, and you're down 40, 50% on a position.

So, I didn't take any trades on that, uh but this is another example of a Chinese stock with no news making a big move. This one was during regular hours. MB, this was a Hong Kong company, made a big move during pre-market hours from $4 to 20 bucks. Uh >> [sighs] >> again, you know, impressive, but ends up double topping and then coming back down towards six. Uh VATE, this was a US company. This one surprised me a bit that it made as big of a move as it did, especially because it was easy to borrow.

Uh NAMI, this was big on Friday, had put in this squeeze from after-hours Thursday and continued into Friday morning. It was the stock I did the best on, but then I gave back the profit, um jumping in heavily at 10, and then getting caught in this flush. But I had a nice trade from this area to this area. I just gave it all back because I became a bit emotionally compromised by my loss on the other stock. So, uh then if we look at WY uh HG, was this it?

Yeah, WYHG from the other day. Uh this one as well put in a big move from $4 up to 12, pulls back, then goes from eight all the way up here to a high of $24 a share, and then comes back down to four. So, we're seeing a lot of volatility in this volatility, certainly our opportunities. But, when you trade stocks with big ranges and you get on the wrong side of it, it can be an emotional experience. So, going into Monday, I'm not really expecting any of these stocks here to be good contenders for continuation.

YJ could have bounced, I guess, but this has been the backside of this move here. So, all of this move would be in the shadow of this high over here of 14, and I'm not interested in trading that backside. I really don't prefer that setup. YJ uh sorry, ZJYL. This is a Chinese stock that has squeezed shorts before very hard. Um it had a day where it halted up about, I don't remember, $20 a share, and it resumed at $200 a share, and ended up giving this just unbelievable move right here, as you can see, that ended up going all the way up to $500.

So, I don't want to underestimate this one. I know that it can be very volatile. However, at this point, the float is 20 million shares. It's higher. The company has sold shares on the open market to raise money, which is why the float went up. So, I wouldn't typically have high expectations uh for a 20 million share float. Going into Monday morning, this might continue at 4:00 a.m. A break of five and a squeeze up towards six, maybe seven.

The size of this move is about that big, so then the kind of the next leg up is sort of similar, so maybe 650-ish. Um sometimes they, you know, are not matching in size. They'll decrease and or or they'll increase and be bigger. Uh but nonetheless, I'm not super, super interested in this one, but it is worth keeping an eye on. So, ZJYL going into Monday for continuation. XHLD, this one was up 46% in after hours trading, but a little bit deceiving because it closed weak and then bounced up.

So, the close is here and so that gives it a gap, but you can see it's because it flushed before the close. This one on the daily chart does have some room, but I just don't know if it's going to work. This is that similar kind of issue where you have this big move and then it sold off. So, now all of this action is in the shadow of that big move. Make sure you're zooming out on your charts. So, when you're looking at these, you can see is there something I'm missing like back there.

You're seeing it on the daily chart is also helpful. HUDI, we've had some big moves on this one. If we scroll back here, even this year we had this day where it went from a dollar up to like $6 a share. So, here it goes from 75 cents up to $1.30, pulls back, pops up, pulls back. This is a price that a lot of traders like. I'm not really one of them. I find these to be a bit too cheap, but some traders may take interest in it. 4.23 million share float.

Up 39% in after hours trading. INHD, this one personally not interested. If anything, it's just a would be a a dead cat bounce. So, this is the stock that was halted for over a month. Um and it's it's kind of sort of like a crazy situation because this stock ended up going up. If we look at the daily chart, on 300 million shares of volume, you know, it goes from like $2 a share to 40, whatever it was. Ends up getting halted and then it's halted.

This was from June 8th. It's halted till July 31st. There was a short seller that filed a lawsuit against the company alleging that the company was intentionally keeping their stock halted during this T12 halt not providing information to regulators because they knew that this short seller was paying a $100,000 per day in borrowing fees on their short position. $100,000 a day. Holy smokes. You multiply that by what was it? 60 days or not quite it was 30 45 days?

It's $4.5 million something like that. I mean even if the stock went to zero, now you've got to cover $4.5 million in borrowing fees. I don't know what ended up happening with that lawsuit if that ended up you know I don't I don't know. But in any case it goes to show that there are some short sellers that take really big positions on these and you know eventually here they've been correct and over the long run most of these Chinese stocks will go lower.

The question is you know can you afford to hold during the pain which ended up being about 45 days there and when it resumed it resumed at $40 a share which you know it could have continued higher. It didn't but it could have. A ZJYL you short something like that and it ends up going to ZJYL and it ends up going to $500 a share and yeah you're smoked. You're done. That's the end of your career as a short seller. And unfortunately you'd say well it doesn't make sense.

You know the company there's no fundamental reason for it to go that high blah blah blah blah. Here you go 6 months later it's all the way back down. I get it. I know. It doesn't make sense to me either but I'm not going to I'm not going to get stubborn and trade against what the market's doing. I'm just going to ride the momentum that is created here. So that's kind of my approach each day. You know I don't just I don't counter trend trade.

I'm not trading against the trend. I look for stocks that are already starting to trend and then I just jump on that momentum. That's what most trend based trading and momentum trading is all about finding an established trend and jumping on it. Now, for me, I like to trade the stocks that have some of the biggest trends that are up the most on the day with the highest total volume, highest relative volume because when a stock has a trend where it's going up 50%, 75%, 100%, 200%, there's just so much more opportunity in there to jump in, jump out, and clip 5%, 10%, 20% winners on individual trades.

Whereas if I was trading something like, you know, Nvidia, you know, yes, Nvidia, you could say, "Oh, it's going up $5 a share, $10 a share. There's a lot of range here." Yeah, there is, but you would have to use leverage or derivatives in order to get a good return on this range because the stock is $200 a share. So, you know, and honestly, for trading something like this, you might as well just be trading the S&P 500 because they're going to be so closely tied together.

All these stocks, the algorithm kind of ties them all together. You know, the S&P starts dropping, these stocks all drop, too. And you're sort of like, which comes first? The S&P 500 is, you know, an index of the 500 biggest companies or the ones that are part of the the index. So, is it the individual company that has to start moving and then the S&P changes or is it the S&P and it's very it's it's kind of unbelievable how all of these stocks seem to move together.

The market's going up, they're all going up. The market's going down, they're all going down. So, why trade one or the other? You may find that some are are more reactive. A 1% change in the index across the board is going to result in like a 3% change on that stock. So, that's going to be a higher beta stock. But, and nonetheless, I'm getting into a bit of a tangent. It just to me isn't the place where a retail traders with relatively small accounts are going to find much success.

And trading in small accounts is kind of like my thing, you know? So, for me, you know, we'll pull up the charity challenge here. Um this is the thinkorswim challenge I'm doing right now. Turning $2,000 into 65 grand in 30 days. Now, day's 31 uh was yesterday or Friday. I mean, I I just I wouldn't have been able to do that trading um anything other than these highly volatile small-cap stocks. So, this is the area where I focus.

Um you've got to manage your risk. It can be There's definitely some volatility there and as you can see, uh you know, just from my last um you know, 60 days, 90 days, whatever. Um you know, definitely have suffered some drawdowns here and there. Uh but on the other hand, um you know, boom, we're looking at uh $1.4 million even after Friday's loss. So, the glass is I mean, it's you know, this is the top of the glass here.

It's a very narrow glass and it's 95% full even after the Friday loss. So, I'm grateful. This market has been hot. We've been getting lots of great opportunities and I'll be streaming tomorrow at 7:00 a.m. If we have some stocks are on the top gainers scanner right here, I'll certainly be jumping into those uh trying to break the ice and build the cushion. And once I've got a cushion, then, you know, we'll see what we can do from there.

So, I'll remind you as always that Well, two things. Number one, if you're interested in doing a 2-week trial, it's $20. You can watch over my shoulder and use the same software here for charting, scanning, and breaking news. $20 for 2 weeks. So, check that out. That's number one. Number two, I'll remind you as always that trading is risky and my results aren't typical and there is no guarantee you'll find success whether you trade with me or learn on your own.

So, manage your risk and practice in a simulator before putting real money on the line. I'll put a link to my day 30 episode of the small account challenge right here that you guys can check out of me recapping turning 2,000 into 65,000 in 30 days and donating all of those profits to children's hospitals across the country. Have now donated to 40 children's hospitals with the goal of donating to 50 and hopefully I'll be able to achieve that goal within the next few weeks.

So thank you guys as always for tuning in and I'll see you back at it streaming at 7:00 a.m. tomorrow morning.