Today we’re going to talk about the Electric Vehicle market that has been hyped up for the past week.
I’ve selected 3 tickers I am going to talk about today, which will be $DPW, $FTEK, and $SOLO. These are the tickers that we were watching last week, they didn’t create enough range for me to trade. I wasn’t interested because their float is too high with a lot of volume. I’m going to give you some specific criteria for you guys to filter. Especially in a hyped-up sector.
The first ticker I am going to cover is $SOLO.
When we’re looking at a multi-day runner, we need to look at max extension and minimum extension before seeing if it is a good shorting opportunity. First let’s look at the 5-year chart. Most of the resistance is between $5-9, the minimum extension for a multi-day runner is 300%. If the breakout is around $5 then we take $5 * 300% = $15. $SOLO barley qualifies for the criteria as it hit nearly $14. Once it qualifies the criteria, lets look at the intraday chart. We want an entry with a decent risk-reward. Many people start sizing too early.
On the intraday chart we can see it went from $9-13 on $130 million volume.
I shorted it around $11.15 which means I’m risking up to the 3-hour consolidation. There was a pre-market high around $11.41. I didn’t size in that much, because on that day the electric vehicle sector was spiking hundreds of percent in one day. Especially $DPW and $FTEK, which are following $BLNK, $DPW AND $FTEK have the highest range out of all the tickers. For me, the priority will be $DPW and $FTEK which spiked the day before. For $SOLO I got short around $11.15 and covered half around $9.20-$9.50.
Held about ¼ of the position overnight and covered around $7-$8 the next day. When you are looking at multi-day runners you are want to know where your reward is going to be, especially if you are looking for the maximum reward. Typically, in one-week, multi-day runners will drop around 75% from the multi-day runner top. Between 1-2 days, after the momentum shifts, the max drop percentage will be around 50%. $SOLO dropped from $14 to $8. I wasn’t very satisfied on the trade because I didn’t have enough risk-reward.
Shorting into multi-day runners that only give you the minimum extensions are not ideal.
The next ticker I am going to talk about is $DPW.
For this ticker if you are use the bounce short pattern to short into $DPW, it’s an unavoidable loss shorting in the afternoon. The ticker started spiking around $2 and touched the resistance around $5.3-$6.5. You can see the stock is forming a massive consolidation between $5-6. In terms of volume prediction $DPW did have a large potential, trading 200 million shares within 3 hours of open. Predicting entire day volume would be around $300-400 million which overwhelms all the historical resistance, especially when comparing the intra-day volume to the resistance volume.
If the ratio is beyond 1:1 then it isn’t ideal. $DPW exceeds all the historical volume in one day. The next day it traded up to $11 and dropped to $5.5. This doesn’t have enough risk-reward for the first red day pattern, the stock already dropped 50%. So, for $DPW, I spotted the momentum shift when it dropped from $11 to $7. On the next bounce I shorted it close to $6.9 and sold ¾ of the position by end of day. I made around $100K and held onto ¼ of the position into the next day.
We have intraday support around $5-6 (Nov 23rd) and we also have support from June and July. Its going to be hard for price to get below this support area.
Let’s go into $FTEK, and this is why the EV sector isn’t over yet.
$FTEK started to spike at $1, and broke through the 160m support around $200. It gapped up 300%, up to $7. The reason it didn’t spike like $DPW intraday is because on the same day $DPW lost 50%. $FTEK is holding the trend and support. The strange part is that $FTEK came all the way up to the high and gapped down into the next day. Even though you want to short using the over-extended gap down pattern, it’s not going to happen because you have a massive consolidation area between $4-7.