Meme Stocks in 2021 transcript

what's up everyone all right so in this episode i'm going to talk about meme stocks in 2021. this is something that i didn't see coming at all i mean no probably i don't know maybe maybe someone did but i certainly didn't uh 2020 was a great year for me i'm going to start this by saying my results are not typical my experience trading has not been typical you should assume as a beginner trader you will lose money if you're trading meme stocks you should definitely assume that you will lose money so i would urge extreme caution when it comes to trading only trade with money you can afford to lose because trading is very risky okay so with that said 2020 uh was a great year for me it was a extremely atypical year i did not expect to do as well as i did if you want to learn more about my 2020 trading year i have other videos where i talk specifically about that but i finished with um about four five million dollars of gross profit about four point i don't know seven million or something 4.8 million in net profit so it was a crazy crazy good year for me and i sort of thought that uh in december as uh you know we're still obviously dealing with covid uh but people are starting to get vaccinated and it was starting to look like maybe things are gonna turn the corner soon the 2021 would probably be quite a bit softer and slower than 2020. and then we had gamestop and so i have the gamestop chart up um right here as you can see gamestop uh was i guess the um is the the ultimate meme stock uh and so this is topical today meme stocks because i traded clove and clove um was a popular stock on the um on reddit on wall street bets and i traded it yesterday and today and today i made i'm up 30 000 on it 19 650 right here yesterday i made about 10 000 on it so i've done well trading this stock but as you see right now it's actually sold off quite a bit today from a high of 29 down to 20. so it's important to understand um how well there's different ways to trade this but i'm going to share with you the ways that i trade it and notice how it tapped right there that yellow line i had that line drawn yesterday so that's technical analysis recognizing that that was a possible place to anticipate a bounce uh is really important because you could have of course taken a dip trade there or expected some level of support or covered a short position there so i'm going to talk about how i apply technical analysis to meme stocks which is sort of challenging because they seem to drive independent of fundamentals and in some ways independent of technicals as well but you can apply technical analysis and i'll show you a little bit about how i've done that so i'll also say that for my students at warrior trading our warrior pro students i did a full case study on gamestop specifically it was a really long video had lots of live trading archives of me actually trading gamestop in and out of the move maybe i'll show a couple of them during this video but i have a lot of things like that that are for warrior pro students but for those out there on youtube i want to share with you my two cents on these meme stocks so let's go back to gamestop so january gamestop um as you probably know had a short interest over a hundred percent it was around 120 130 percent and what that means is that uh for those that are not super familiar with how these stocks work uh when a company does an initial public offering they sell shares onto the open market and so for instance if a company sells 100 million shares onto the open market then they have a float it's called a float of 100 million shares from that point forward so anytime we're trading we're buying shares from someone who's selling and someone who's selling is selling them to someone who's buying so the shares are trading in a closed market there's not more shares being created unless the company specifically discloses that they are uh doing a what's called a secondary offering which is selling more shares on the market and both gamestop and amc have have done this it's a way to raise more money you know you sell you write more shares you sell them and then you know you raise money from the sale the proceeds so anyways um on gamestop the float on gamestop i want to say is like 58 million shares but let me just get you um the stats on that so gamestop well that and then of course they've done the secondary offering so now the the float's probably a bit higher but i think at the time um well let's just say 58 million shares for instance uh maybe it's a little higher or lower so 58 million shares so if the short interest is 100 that means every single share that's out there is actually being held short against the company if you're short you're betting that the stock goes lower because you'll cover it for a lower price in fact you're probably hoping the stock the company goes bankrupt so you can cover it for basically pennies on the dollar and so what what happened in the case of gamestop was that uh through last year and even the preceding years gamestop has had a difficult um you know difficult time maintaining a good stock price and and a lot of that has been related to the fact that they are kind of a you know old-school uh brick-and-mortar business in a lot of ways you know game stops usually in the plaza with a walmart or a tractor supply store or whatever and with more and more people getting things just through streaming uh the the sort of value offering that gamestop had so long had has declined and so from a high in 2013 of 57 a share just for instance um you know in a high back in 2007 of 59 a share uh during the height of the recession everyone's buying games because hey i can't work at least i might as well play video games so funny how they have that inverse relationship overall market drop and game stop going up uh but in any case so um it was down to like four dollars a share heavily shorted by some big big big big money hedge funds and you might ask how can a company or how can a um a stock be short more shares than actually exist and that's through the process of lending so if you short a million shares at twenty dollars and then you lend those shares to someone else you're doubled short because now two people have a short position on the stock it's it's kind of a great so it's something that maybe regulation will look into after this move but in any case it's something that has been allowed so gamestop starts to squeeze up in uh january and when it first started to squeeze up i i wasn't really that interested i was kind of like i don't know it's game stop this isn't a stock that i've really ever liked trading it's it's choppy it's thickly traded there's a lot of big hedge funds and institutional traders that are interested in it typically this isn't something i would expect a lot of momentum from but then on the day where it squeezed from 45 up to 75 i was like okay i have to start participating in this because clearly there's some really serious volatility and from there it just went higher and higher and so i like many others began following uh you know what people were saying on the reddit forum wall street bets you know what what is what's the consensus over there and the consensus was this is gonna uh this is gonna destroy a couple of hedge funds that were betting against a good american company and uh you know let's let's show them that was the let's show them kind of attitude i was seeing on um on wall street bets so what's interesting about this is that you know this move right here is very violent i mean i'll put it on full screen and i'll just clear out all these lines these are my i draw these lines just to kind of this is technical analysis so i'll start drawing them on as we go into this a little bit deeper but uh you know so you had this crazy move here from 42 all the way up to 480 bucks and on this day right here it had a high of 480 and a low of 112 that was one of the most violent um reversals i had ever seen it was um the sell-off was unprecedented the bounce was crazy it was just insane so there's sort of two ways that i've seen people trading these meme stocks and the wall street bets strategy seems to be um to you know take out a student loan or to do a cash advance on a credit card and put all of that money into a way out of the money options contract which has a probably 95 chance of expiring worthless and then you know you have so many people that do it uh and the stock gets fueled up and everyone gets excited and all of a sudden you have these people who are talking about having turned ten thousand dollars into like 200 grand which is a lottery ticket type of trade i mean it happened on gamestop for people but it also happened for some people that they bought it at 250 280 300 and 400 500 and are perhaps still holding it deep under water i mean what you know this is a market where money can be made and of course money can also be lost in equal amounts so um you have to be very mindful of that so in any case we had this first sort of crazy squeeze up to 483 of regular trading hours and then all the way back down to 48 and then people started buying it up down here i'll back off support and this thing ripped back up to over 200 and then right here up to 348 and then just yesterday it hit a high of 345. so now as we open up the chart a little bit more we're starting to see that this thing is creeping back up quite a bit and so some of the people that bought down here in the in this area i'll just highlight it like this so some of the people that bought down in this area are sitting very nicely as it's up you know almost tenfold from the the 40s you know if it gets to 400 10 fold the people that bought down in this area are doing really well up almost 100 percent i mean it's it's kind of mind-boggling uh there was a article about ten thousand dollars put into the s p 500 at the beginning of the year would be worth like eleven thousand right now ten thousand dollars put into um game stop at nineteen dollars i mean you could have depending on where you sold it or depending on whether or not you're still holding it um you know you're talking about 200 000 plus dollars it's it's insane and that's not even trading options but i don't want you to think that trading is easy because it's it's not a lot of people are lost on this and um so my approach was to try to apply the technical analysis that i that i know and that i use on a you know daily basis for my trading to find ways to trade um you know this type of stock and that was uh that has been a challenge at times but uh more than more than not i've been able to do well on it and i've definitely come out on top on gamestop even though i've given back some gains here and there so let me just um let me just show you i i'm going to show a couple um maybe live trades on this but but first maybe let me just break down just trying to find maybe like a day where i had some wines drawn in here so so we've we start to get some of this um some of the stuff dialed in oops i know that the charts almost look like a spider web it's just kind of so crazy but this was when we were actually um hitting the high of 512 dollars i mean this was this was crazy so for me right here uh i did wake up at uh four in the morning to trade this squeeze up to five hundred dollars so right in here and i know like i said it's it's kind of crazy looking the way the chart is but what i was looking at was the previous day's high and resistance right around this area here right around this area we had some resistance right the candles had hit that level these are candlestick charts that kind of hit that level and pulled back and then it came back up you know close to that level after hours and it started to pop back up to that area again pre-market and so i thought that if it broke through the high right here of this green candle if we broke through that level then our which is basically the same as this level here then our next target would be to break through this level and we broke through this level here then we're looking at a move to all-time highs and boy did we get it this thing squeezed from 380 dollars to 420 430 440 all the way up to a high of 513 dollars it then drops all the way back down to 410 comes back all the way up to 498 pulls back and then at the open sells off down to 260 a 50 drop 50 drop and then off that drop it pops all the way back from 260 up to 480 and then it comes all the way back down here to 112 and then bounces up to 370. this is absolutely crazy now if you had taken the approach of uh for instance buying options on it one of the things with options that's really unfortunate is that you cannot trade them pre-market or after hours so if you had had the 500 calls for instance and you know you're watching this go from 380 to 450 to 500 there's nothing you could have done whereas with trading stock you can of course get in and get out if you'd like pre-market and so that that's what i did um i'm not really i've never been good at day trading options because options typically have bigger spreads they're they're a bit the liquidity is low and so you can't really just get in and get right back out the way you can with stock you get in and then you start to have to sit and hold it so options are really better for kind of that swing trade strategy hang on girl go lay down scooch so they're better for a swing trading strategy and that has been i think probably predominantly the strategy that has been um uh adopted by people on on reddit just to kind of buy and hold and let it let it just go so while that is a strategy i suppose it and it has clearly you know as we can see it worked on gamestop it has worked on many others i'm skeptical to how long that's going to work for it it feels like there's a little bit too much luck in there and hope whereas trading like a technical breakout like this over the course of 15 20 minutes uh it's a very technical setup and and so it either works right away or it doesn't so you you know right away whether you're going to have a make money on it or you have to get out and so this to me being able to read these patterns in this short time frame of a five-minute chart i i think um i mean this is what i've been doing for such a long time that to me this feels like um it's there's not really a lot of hope involved i just sort of know what i'm doing and i know what levels i'm looking at and i know if it breaks these levels that with no upside resistance you've got a lot of potential so this is what i focus on i focus on trading technical analysis and and i apply that i can apply that to any stock i don't usually trade higher price stocks like this but sometimes i will and in this case because the volatility was there it was worth focusing on so anyways crazy volatility there on gamestop um let's see i have a um uh let's see so i've got a video here that i'll just show you so this was um this was insane so i'm i'm in this trade here this was in january it's uh just squeezed from 150 150 all the way to 188 i mean that by itself is a monster green candle so i'm setting up right now 30 thousand dollars on i kind of started recording a little late it's at 4 18 in the afternoon so we're in after hours trading right now and the stock is up 145 and i'm currently holding 292 shares at 169.88 which puts me up five thousand dollars eighteen dollars a share and i'm starting to get dialed in here to look for a trade through 200 and just watch how quickly this thing moves so the chart now is actually moving like off the chart this the stock is moving off the chart because it's moving so fast my chart hasn't uh kind of reset to the current price so here we have a buyer we had a bid there at 90. so we're catching some support at 90. we may have resistance at 200 because it's the whole dollar that would be very common okay there's 92 there's a flush back down to 90 and watch that all the way back down to 85 86 so that's like a three point flush four point flush so it pulls back and this is where short sellers may start to short here and go short at 185 and they're like okay the top is in so if i was short where would my stop be the high a day right around 195. so as it starts to pull back here technical analysis is telling me okay we have a red candle forming on the chart right there it's the first red candle after this big squeeze and it has a little bit of a topping tail that's a 10 that's a one minute chart down there sorry i have two one minute charts actually all right so we're pulling back a little bit we've got 163 million shares of volume now what happens if we break through the high if we break through the high then anyone who just shorted is going to be most likely forced to cover and we're getting a short squeeze and don't forget this daily chart is powerful it looked like it was topped out and we have just broken through that 159 level and gone right up to nearly 200. so let's fast forward this a little bit more so we pull back a little bit more down to the 80s so we're getting what i would call right now a proper pullback all right so we're kind of i dial in my chart and what i'm looking for is the place where the stock starts to curl where it starts to find support and then move back up and again this is technical analysis this may not be something you're going to see a lot of people talking about on reddit this level of technical analysis looking at level two time and sales in the chart but for me this feels like a much safer way for me to understand the price action and for me to trade the stock i can understand what's happening here and just buying an options contract or even just stock and just walking away and holding it feels like i'm leaving way too much up just to chance so right here it feels like we're basing out a little bit it's kind of starting to go a little bit sideways now that'll be confirmed if these candles the green candle start to make new highs and move back up right so if that starts happening then that confirms that we're beginning to base and reverse and confirmation therefore might be a break back over 180 so if we break 180 i would expect uh a quick move so let's see what happens all right so we're at 176 here 177. now it's worth noting that as you get further into the day things do sometimes slow down especially after hours but this is definitely a basing pattern right in this area okay so just checking my levels making sure there's nothing else i haven't seen and look at this right here all of a sudden volume is starting to come back in it pops back up we hit 178 179 so a little candle wick like that is a usually the um what is it adfn market maker route all right so let's fast forward a little bit more we're back to 78 and are we going to get that pop back over 80. sometimes it feels like um this momentum that once it it we're sort of in a slack tied area here but once it starts to get rolling all of a sudden you're going to get this momentum behind it it's just like this this wave of momentum and all you have to do is ride that momentum so it looks to me like um the break of 179 180 is going to be a pretty uh pivotal spot so we're coming back up here this is a one-minute pullback right underneath that 179 area we're starting to get dialed in i'm looking for possibly the first candle to make a new high look at that so let's let's not miss that all right back that up look at how i just want you to see how fast this breaks so why does it break so fast here that's technical analysis this is an apex point the first candle to make a new high on this on this flat top through 179 look at that 179.50 179.90 180. and there's a 29 000 share seller that's a big seller does it matter there's 25 21. look at that all the way up to 184 185. look at this resolution so that right there even though i didn't add on it that by itself could have been a good trade and now 186 187 now i have added and now let's see if we get that break through uh no pulled back a little bit so now let's watch this so i've added back here so now we're getting this five minute set up the first five minute candle to make a new high and i'm looking for the break through this flat top here of 190 so i add right there there's 191 191 192 coming up our high is around 193 back of my target would be can we squeeze through 200 there's 95 there's 97 there's 204 okay let's back that up let's watch that again so watch this watch the break of 200. again you're just going to see how fast it breaks so this is me applying technical analysis to a meme stock and this is exactly what i did today on clove and it's what i did on amc it's what i do on on all of the meme stocks when i see good opportunities i i'm i suppose leave look at that all the way up to 204. i suppose i'm leaving some money on the table uh by not more aggressively you know buying out of the money options contracts and things like that but at the same look at that seven eight nine ten thousand dollars ten thousand right there open p l look at that i'm in at 197. that's 208 205. 12 000 p l so i start taking a little off the table under that breakout and i believe this is uh going to be about thousand 46 in in total profit there's 210 so one of the things i've learned on games on these stocks is not to underestimate how strong they can be not to try to short them to try trade with the momentum but when the momentum starts to shift so i left a lot of money on the table here i sold this too soon i sold too much too soon i'm still holding some but i sold too much too soon so when the momentum starts to shift however i have to be very careful at trying to buy dips or bounces because what i have found is that because i think there's so many traders that on reddit who just kind of like check on their phone and refresh the stock price i think people just start kind of hitting market orders to sell uh you know they oh wait hey so i'm starting to lose a little money okay i'll just sell here so you sort of have these waves of sellers that just continue and some of those waves of sellers are from people that have been holding for days and days look at this all the way up to 222. i left i left so much i left 30 000.20 plus thousand on the table there i mean seriously that that by itself i could have held it longer so uh you know but in any case so this was a a really phenomenal trade here on um on gamestop all the way up there let's look at that so it drops back down let's see if i should pull my show my p l i don't remember um back up there so you know but this is this is tricky stuff now it's doing another consolidation so trading it again [Music] let's see i'm just curious about where where i finished on it the um the screenshot says um or the the label of the videos well i don't know it doesn't it doesn't really matter so anyways um so crazy crazy move there i think the the name of the video is forty six thousand dollars so that's probably somewhere around there is where i finished but forty six thousand dollars during after hour squeeze so you know then we switch to something like amc and amc similarly over the last um few days i mean it was really strong uh in january when we were having that big move on on gamestop but it wasn't as strong wasn't as strong it's actually gotten its real wave of momentum right here in may as things have been opening up and and this and that and then we've started to notice a lot of these kind of other stocks that all of a sudden catch the attention of um of of the reddit uh community and so what it seems like the reddit community looks for are stocks with high levels of short interest because squeezing out the hedge fund short sellers seems to be you know sticking it to the man so stocks with high levels of short interest stocks that have been beaten up for a while and stocks that have an options chain it has to have options because those are that's what you need for those lottery ticket type of trades so amc blackberry um i traded blackberry i trade amc uh today we've had clove and there's been a few others that have been kind of um you know they they kind of gain a little traction on the forum but they don't become really the most popular stock so there could be a period of weeks where there's a few different stocks that people are really excited about but there's not like one really obvious one when you have one that starts to really move then more people put more and more people focused on it and then it really does become the obvious one to trade because there's so much attention now one of the challenges for me is that trading meme stocks i mean this is just a different i've never really this is new so it feels sometimes it's taking momentum away from what otherwise might have been a good quality stock or a good quality trade with good news catalyst because this one just so many people are watching it you know like i said clove yesterday had 750 million shares of volume and so all the volume all the eyes on that stock came at a sacrifice of other stocks in the market that might have been really good but people didn't focus on it because there was something more exciting happening so for that reason i will focus on what's obvious and if that happens to be a meme stock the way it was yesterday and today then then it is what it is uh but i am noticing that it's unfortunate because sometimes what i think could be perfectly good setups are just not resolving well it's because of so much attention here so anyway so we've got clove blackberry amc gamestop and there were some others those are the ones that just are off the top of my head that have been sort of most recent but you know long story short my approach for trading meme stocks um has not been to sort of jump on the bandwagon of buying these like way out of the money calls i recognize that i could have done that on like every single one of these and i guess made money because they seem to have all gone up but on the other hand that just seems to go against my my style of trading i i just have a really hard time being okay with just taking this kind of hope trade where it's just like i i just am hoping that it works um i don't know it just doesn't seem to me to be the way i've ever traded so i focus on technical analysis and as a result i've been doing quite well and i'm i'm happy with that so there's different ways to trade these uh different people certainly have um different approaches one of the things that is kind of interesting has been the fact that some of these have become very choppy where technical analysis traditional technical levels that usually would work really well don't work as well in certain places and i think that that's because there are so many people trading these stocks that don't even look at charts that aren't even looking at level two so the things that i would traditionally consider to be like the traffic signs of the market like this is a red light this is a green light now you have people that are just blown through red lights and then you have people that are stopping at green lights they just don't know so it creates a little bit of choppiness and so where i've done the best on these have been during the periods when they are just explosive so like yesterday on gamestop i lost 10 000 on it and it you know it made a big move but i just got in too high and and clove was the one that more people were focused on so gamestop wasn't super obvious at that moment and i probably should just left it alone so it's it's i'm still trying to get comfortable with how to trade them and i still have days where i do give back some profit obviously on on gamestop i did give back quite a bit um but let's see so year to date um i'm just curious at how much i actually am up on gamestop so um gamestop 312 000 so i'm up 312 000 on gamestop this year um i you know i can't complain about that now could i have made more throwing you know 100 grand as some out of money options contract yeah for sure but 300 000 is uh very good and i'm very happy with that and that's an important reminder to be grateful for what you have and not always be comparing yourself to another person down the road because there's always someone down the road who's made more money than you unless you're elon musk or um jeff bezos so unless you're one of those guys and at any time they are it's one of the other but there's almost always someone except for two people in the entire world one person that has made more than you so you have to be grateful for what you've got you know at the end of the day if you take this lottery ticket trade because you're trying to prove something or do something and then you end up losing money and you lost money on margin or you lost money that you borrowed you're the one that's stuck with footing the bill there you know i mean so you've got to live with that loss at the end of the day and you got to trade responsibly so yes trading is risky my results are not typical but i do enjoy trading and i do enjoy the volatility that we've had this year and i hope it continues i don't know how long it'll continue but i'm going to keep riding the waves and you guys who are members in the community warrior trading will keep watching me uh as i'm as i'm trading in and out of these ones they're very interesting so i hope this has been somewhat helpful for those of you guys tuned in and i will see you guys for the next episode all right take care i hope you really enjoyed that video and make sure you hit the thumbs up and subscribe to the channel if you haven't already our goal is to hit 1 million subscribers this year but we won't get there without your help so please please please hit that subscribe button