It does not matter how many times you hear me say this, that I love the STRONGEST of the strong stocks (to buy), yet people refuse to listen to this. It’s mind-boggling. So you guys continue to struggle with your trading of stocks, and that is a huge reason why. Many reasons for it, but an important one. Another reason is you guys are trying to predict, analyze, guess, figure out. Instead of patiently waiting for the probabilities, the setups, the process to literally tell you what to do.
Also, as I constantly talk about – if your goal is to be an outstanding individual stock trading performer, then you MUST be trading, on a consistent basis, at least one of the #1-#5 stocks of the day. Below is the list of the top stocks of the day, 7/21/23, click to view:
AMC was the #1 stock of the day, as it soared on news after hours. I did not trade it. AMC is a long time favorite among a crowd of people who believe it has to go up simply BECAUSE of its high short interest – it is high but not one of the highest short interest at 28%. More on this later.
Friday 7/21 was a relatively quiet day, and yes I did trade (only) 1 of the top 5, DWAC (Donald Trump’s stock btw), but I scratched it – not very good. Click chart below to view, I bought (arrow) what I thought would be a new momentum move, it did not do enough and I sold later (arrow) when it retraced back down so it was a scratch.
I did not trade any of the other top 5 (an uncommon occurrence to only trade one of them), but I did have a small up day overall, via a little here and a little there. And I need to point out that there are only THREE stats which are of value to me and which I will check before buying a stock to trade. Any and every thing else is worthless. Each stat will be explained separately. Those 3 stats, besides the stock symbol of course, are – the industry group/sector of the stock, the float of it, and the % short interest of it.
The industry group is important because when you have several stocks in a group moving up together this then increases the probabilities when buying a stock in the group as a whole. Also a “hot” group and one in the news can tend to have more ability to run (up or down dependent).
The float is super important because the less shares available to buy, the more POTENTIAL upside there is, the more volatility there would then be. Not necessarily a good thing but in the right set up very good thing. Low float is something under 200M, under 50M is very low float, and under 10M or even under 1M is extremely low float. More on that in a video soon along with the next stat.
Possibly the most important stat is the short interest – and it is also extremely misunderstood and more importantly to understand here is that it is totally misapplied/misused. This is a topic which also will be discussed again in more detail in a video. Short interest stats are very helpful ONLY ONLY in the proper situation (in a breakout) but is meaningless until the breakout. High short interest is over 20% and extremely high short interest is over 35%. For example a stock I traded recently is CVNA Carvana which has had a huge move up. It has had a huge short interest – over 60% – but did NOT go up for many many months in fact it went down, despite the high short. And it did not start to soar (short squeeze) until AFTER the breakout.
And where/how to get these stats – there are multiple sources to find these stats – whether they can be trusted to be correct is another question. The more you do this the more you can decipher what can be trusted. Finviz.com is decent but I get my stats via my Schwab trading program.
As far as the strongest stocks, which are low float and have big/huge short interest, and I have traded, are UPST, AEHR, AI, CVNA, BBIO, AAOI and many others. And these stocks were already very strong BEFORE I initially bought them. These stocks will be discussed more.
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