How To Deal With Short Squeezes During The Holidays

How To Deal With Short Squeezes During The Holidays

How To Deal With Short Squeezes During The Holidays 1024 546 Steven Dux
What's up and welcome back to

This week's lesson.

Today I want to cover some recent runners and how the holidays play into them. Recently we have seen reverse split tickers, which means we are seeing a change in the total number of shares trading through morning gap-ups and having a thin micro float.

TAKING A LOOK AT

REVERSE SPLITS

This is something to be very aware of because there’s much to understand with a reverse split. When you have this kind of ticker, and the float changes, the resistance changes as well because it’s likely that you’re looking at a company in distress. You have to use the reverse split ratio to times the resistance. However, it becomes more difficult too long or short because, in simpler terms, we are looking at a mass consolidation for this specific company to reduce shares.

STOCK TICKER:

$ANKR

$AKER didn’t experience many borrowers who had people thinking they missed an opportunity to short on the hype.

This is something to be very aware of because there’s much to understand with a reverse split. When you have this kind of ticker, and the float changes, the resistance changes as well because it’s likely that you’re looking at a company in distress. You have to use the reverse split ratio to times the resistance. However, it becomes more difficult too long or short because, in simpler terms, we are looking at a mass consolidation for this specific company to reduce shares.

It’s easy to push a stock up if there are many shares behind it, and this panic led to mass selling, sometimes even upwards of 10,000 shares, which drives the stock way above the breakout level. Now the reason I didn’t trade here is because it didn’t meet my bounce short criteria, which states that the stock must be over 50%. Suppose the stock isn’t even up 50% on micro float, then it’s not even worth shoring because there’s not enough risk-reward.

Having this knowledge keeps you from falling into traps that displace your emotions. Noticing volume is another way to avoid a trap.

TAKING NOTE OF THE

VOLUMES

If the stock is trading, let’s say, ten times the volume in float rotation, it’s getting close to the resistance volume, and I cut my losses.

I get out then because the stock is getting crowded and tends to favor the buys at this point. You don’t want to buy these micro floats stocks in reverse split because they are already behind. When you see the reverse split, you’re looking at a stock that made too many offerings and is trying to raise money because they went below one. Another reason is that they don’t meet NASDAQ requirements, and they have to reverse split in order to get above one.

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