by Gavin M. Herrow. Harrow? Hallo? I don't know, I'm trying to be smart. There's an old trade play called Buy Stocks with High Short Interest in anticipation of high short squeeze. Yes, this is the same as buying a 1980 Toyota Corolla with the hope that it'll be an antique some day and will be worth 50x more than the $1200 you paid for it. I can name a ton of companies where this strategy would not work. For every 5 companies that have high short interest, there probably could be one that it would work. That's a 20% success rate. In my book, that's not enough. The biggest argument people always give me is TSLA - "Gav, you keep saying it doesn't work but look at Tesla." As mentioned above, it's 1 in 5. Let's look at a basket of stocks with high short interest: TSLA, BBRY, JCP, GMCR, and MCP. I purposely left NFLX out of this list as it did used to have a high short interest. Again, even if you included it, it's still 2 in 5 which is 40%. In any case, the chance for a massive short squeeze is always a one off. Tesla pulled off a nice publicity stunt and they're basking in that glory but that stock was stuck in the $20-$40 range for YEARS not months. NFLX was also stuck below $70 for months. It is always a gamble no matter what. People jumped into BBRY thinking it was going to be the next TSLA after the release of the BB10 and it was a major flop. So you can see that buying stocks with high short interest is not only a recipe for disaster but it's also a big lottery play. But hey, I don't know how to trade. So what do I know. Carry on and BTFD!
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by Gavin M.
Shutdown? What shutdown? The market looks just fine dawg. Looking at last Friday's chart on the S&P 500 (above) you will see the market looks healthy and normal. As a trader, I couldn't agree more. The market seems to keep discounting the stupidity of our government. As a trader, I could care less if Washington is having a cocaine party - because boy the momentum is still to the upside for trading. Some of the message boards and sites out there will keep promoting the angry rhetoric of why we're not lower especially with what's happening in Washington. I'd say life's too short. Just let things be and enjoy the sunshine! I always tell people to make hay while the sun's shining. It's incredibly amazing how we rallied 20 points off the lows on Friday morning on absolutely nothing but utter bullsh*t. The bullsh*t is strong in this one. This is the new normal - a market of little to no volume pushing prices higher on nothing but wishful thinking. Perhaps all we need now is a debt default to send the S&P 500 soaring to new all-time highs .... In the end, Buy the F****ng Dip. by Gavin M.
I wanted to leave the image above in its virgin, pristine condition before it dipped to 7.76! bahahahah lmao. So here we are again, JCP version deux and wishful thinking ad infinitum. I really have to thank the JCP knife catchers because without them, I wouldn't be able to buy my brand new Rolex this weekend. Why do people love pain? It's a question that bothers me every day. It bothers me when I see people on twitter post that they lost money. There is nothing on the chart above that screams BUY to me, NOTHING. If you do not see what I see, maybe it's time to throw in the towel and get some learnin' done son. Again, you're reading this and you're thinking, "This Gavin guy's a prick, he's a douche bag, he's an arrogant SOB asshole.. " You can use all the expletives out there, it ain't gonna get you your money back nor will it let you develop a damn brain. Here's what will help you. Instead of putting all your hate on me, ask yourself, "What the f*CK did I do to mess my trade up?" That might be a better question brah. In any case, JCP, I don't ever see any buy opportunity. If and when it does present itself, I shall let my Equity Sense clients know. Until then, keep buying JC Penney boys! I want your hard earned cash!!!!! |
Multiple AuthorsTraders from Equity Sense will be writing on this blog on positions and other market-related things. Archives
May 2018
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