Another Crazy Trading week with shipper stocks in specific $DRYS and my interpretation of $RJETQ docket 1189.
As many of you saw this week DRYS went absolutely Insane going from $4 to $115. Now this is really a power of low float stocks that have high demand. Simple supply and demand. When there are only 386K shares available and the buyers hear it is moving and more and more people start buying the shares become more expensive. Since it was a low float stock there weren’t many shares to get borrow for shorting so as it sold off the same drop happens to the downside.
This stock is one that changed lives in a great way and a devastating way if you were on the wrong side of the trade. For all those that made great money. I applaud you and good job! For those that lost money. Analyze the trade and see what went wrong. Did you have fear of missing out or too large a position for the large $ swings the stock took.
DRYS was a stock in the shipping sector and as many saw when one stock in a sector is moving it will tend to have sympathy plays for other stocks in the same sector. So DCIX, TOPS, ESEAS and others that even had Ocean in the name all reacted sympathetically and shot up with their low floats.
Once DRYS was unhalted and dropped so sympathetically did the other Shipping stocks.
You will see these sorts of reactions when a major retailers, chain restaurants, gold stocks, or even cyber security stocks are affected. So it is good to know what stocks are in certain sectors. A free source to find them is on Finviz.com and you go under groups, overview and then simply click on the sector and those stocks will come up. It is a matter of preference how you like to look at them to analyze the information in a linear or chart fashion. Check it out and play around. The more you look for different ways to find information the more you learn along the way.
My biggest learning expereince and painful one at that was with RJETQ this week. They filed the good news that they will be emerging from Chapter 11 and then the bomb was revealed in their reorganization plan.
As you probably know I had avidly been following the whole process and looking forward to the filing of their emergence as a positive reaction show in the stock price to profit. Well this time around with an airline stock I did not have the same success as the American Bankruptcy emergence.
Here is the bad news for any share holders of RJETQ found in court docket 1189. Per my interpretation of the legal jargon. It took a couple steps for me to come to the conclusion that selling is the best option as from my understanding. If the court accepts this plan December 8th the stock could be worthless in my opinion
Step 1 was looking at 6.8
Where they say that All stock should be cancelled and cease to exist. I went back to research what the American Airlines Chapter 11 plan said and sure enough it had the same language. They usually cancel all the stock and if they do convert will reopen with a new ticker.
So next step was to look up the New Common Stock Interests.
So from reading this it became clear unless the shareholders are part of the Class 3(a) then we do not receive anything once this version of the plan is accepted. So the next step is to see how as a shareholder we are classified. Onto researching as a stock holder in the explanation of terms from the beginning of the docket.
And I found that as an equity interest (which was the verbiage used in the American Plan) we are considered Interest in this document. So then onto see how the “Interest” of RAH is considered underclassification.
And I see here that it comes full circle back to Clause 6.8 that all existing Interests shall be deemed cancelled and shall not receive or retain any property on account. Now I’m not a lawyer by any stretch and this is 100% my interpretation of the document.
As a result I sold my full position of RJETQ on Friday for a painful loss of 58% which is my largest to date since my day trading career began. It was not an easy pill to swallow. You can ask my husband I was really upset to loose the capital for our family. This however was not a day trade and a long term swing. I think back to the big gain that I had with the American Bankruptcy where I turned 25K into 250K and realize it is small in comparison.
My lesson learned from this is be flat before the emergence from bankruptcy filing is already filed because the shareholders are the bottom of the list. As with every loss big or small or breakeven I look for the lesson to be able to move forward and not get stuck in the past.
When your head is busy thinking about what you should have done it is not clear to move forward with making in the moment decisions to trade well.
For Monday I will watch for the most part and I have my swing of LOPE short from 56.14. I’m looking for it to break down further as it is looking overextended on the daily chart and Friday was a second red day for the stock since the High of 57.47. I have a smaller share position to allow for more room on my stop.
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This blog is for information purposes I am not a registered securities broker-dealer or an investment adviser. 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.