We’re going to look at $CBLI, I made $120K on that. Then $MRIN and $EVK, I made some smaller trades on those. Overall, this week I made between $200k-$300k. I’m going to go over the majority of my profits and where they came from, and how I traded it in the morning.
The golden rule of the market is that if 90% of people are linked to one side and 10 percent of people were likely to profit from the 90%. That corresponds to the rule that 90% of traders lose money. When you are putting that psychology into the market you can see how people react. Here are 3 examples that played out in the chart.
The first ticker I want to talk about $CBLI, let’s look at the historical chart.
We have tons of resistance everywhere (June,July) and a lot more resistance in early 2020 (early Jan/Feb). When you see this much resistance trading tons of volume, that means the shares are rotating from the seller to the buyer. People that bought earlier want to hold it forever to make sure that if the stock ever comes back up again, they would likely even up their positions (get flat). That’s why you see tons of selling power after market opens. For this candle, this was a chat room pump, it spiked almost $1.50. As soon as the breakout happens, it was a huge fake out on everyone. Everyone that bought the breakout is under water.
In this case the historical buyers are selling to the new buyers and the majority of people that bought the breakout (90% of people that own the float) are underwater. If 90% are leaning to one direction, then 10% of people are likely to profit. In this case, that’s why $CBLI dropped massively and did a fake out on everyone. I went from $5.40 to $3.20, this is the ticker I shorted around $4.88, then added on the spike right here. Overall, I didn’t top tick this because it was a chat manipulation. Overall, the direction won’t change based on the chat pump. If the volume is sufficient then you don’t have to worry about any type of chat pump.
If it is liquid enough, then always focus on the chart and think about if the stock is manipulated.
The second chart is $MRIN. This ticker had very similar pre-market action.
$MRIN and $EVK have no resistance on the historical chart. We see some on October 22nd. The reaction in the morning completely changed. MRIN failed in the morning, came back and consolidated around $4.8 then dropped at the close. $EVK spiked through pre-market resistance. It started around $3 and spiked to $5. Most tickers that test premarket consolidation will fail, but in this case, it broke through. If 90% of the people are shorting, then 10% of the people are likely to gain.
You need to have a certain pattern that consistently produces enough winning % and a decent reward. For the last 5-7 examples we show premarket gainers tend to spike into resistance, then sell off after market open. You need around 100 examples with a consistent winning %. If you see this type of pattern happen 6-7 times and think it’s a pattern but don’t have a large sample size to back it up, then it wouldn’t be ideal for you to go big on size when shorting the pre-market resistance.
The second point I want to make is that we’ve had 10-15 plays (tickers) over the last week with 15-20 million volume traded in the pre-market.
The majority of them tend to spike in the morning and fail. Don’t feel too rushed to get into the first open candle, there will be plenty of volume after. Being patient is the key to becoming a consistently profitable trader.