Understanding my Watchlist.
It was another great week with over $4,000 in profits working 4 days at my desk. Where can you make this kind of money? Well it doesn’t just grow on trees you have to study the market and understand what you are getting into in order to be in the 10% of successful day traders.
The photo above is a sample of the research I do after 8pm EST to see where the stocks are before open. The general market hours are from 9:30-4EST. We also have after-hours 4pm-8pm and premarket 4am-9:30am. That is another 9.5 hours of price action that can change a stock. That’s why I will do the research, but I really look at the stocks right before open to see the most up to date price action. Day trading is about being present in the price action and reacting accordingly. Yes there can be indicators that lead you to believe something will happen to the price, but the market is not always rational. You can have earnings winners that tank and earnings losers like $NLNK that end up spiking.
I received a Profitly message from safariames to explain what I meant in my watchlist with Reversal, Short Squeeze, Longer Term, Gap Fill.
When I have a stock on the Short Squeeze list it means I’m expecting there to be a fairly nice upward movement once it reverses. It is due to the fact that the ones I have under this description are popping up under a filter with 30% short float or more. That means of the shares outstanding 30% of them have been sold short with the expectation that the stock will drop. Once there is a nice upward trend then you have people buying long as well as the people that sold short that will buy the stock to cover their position. That in essence creates a nice upward momentum in the stock price. It’s basic supply and demand and the more demand for the stock the faster it increases. Sometimes like KBIO you will see a stock go from 1.50 to 45 but it is a rarity. That is when you don’t want to be one of the shorts getting squeezed.
I did mention reversal in my Short Squeeze list. What I mean with a reversal is when a stock is climbing and it hits resistance such as TRUE that climbed to 7.78 and then stopped climbing and sold off. The stock reversed direction in reaching resistance (you could think of a ceiling that you can break through.) Or it can go the other direction when it hits the LOD or the support and it goes up in price. I have been long biased lately and I look for reversal plays. I like the idea of a long play being limited to the loss of my investment where as with a short the loss potential is unlimited. After watching Mark Croock’s video about shorting with options instead of the stock to limit the loss I want to learn more about options (once I hit my 100K in profits over half way there). I think it is great to limit your loss to your investment instead of unlimited. Sorry off topic back to watchlist.
The Gap Fill is another type of reversal but it is one that I’m looking for after a huge gap down. An example of this is COWN it gapped down from close of 3.60 to open of 3.20 and it ended up closing at 3.49. This is a one day fill of most of the gap. I think of gap fills taking a little longer but the best are the same day. Which brings me to the longer term.
I do swing trades and hold them longer term for stocks that I believe have value to them and will gain value again. My best stock for this is WYNN when it was at $58 close to the 52 week lo. Over the next month it climbed $40 a share to $98. I played it very conservative taking max I think $6 a share.
I hope this helps you to decipher my watchlist and learn more about the plays I target. The market is always changing and I do short as well, but for the present time I’m more long biased.
Have a great weekend. As always enjoy the time with your friends and family as those moments are priceless and irreplaceable. If you have questions shot them to me on Profitly, Instagram, Facebook and Twitter. I enjoy helping you as I was in your shoes not long ago.
This blog is for information purposes I am not a registered securities broker-dealer or an investment advisor. The information here is not intended as securities brokerage, investment or as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund.