Bulls on Wall Street
What a year it was on the stock exchange. Insane movements become commonplace. We have come to a point where doubling our share price is hardly worth reporting.
To grow as a trader, you need to study the past and learn from it. These patterns repeat themselves. To capitalize on the future, you need to study charts consistently to prepare.
This year’s stock charts will give you some lifelong lessons:
Let’s start with the meme stocks. $ GME was the most talked-about stock this year. It started with the legendary run from under $ 5 to nearly $ 500 in just a few weeks in January. It’s a company with terrible fundamentals in the dying industry that retailers flocked to to “stick to suits” shorts.
While I don’t understand how this is accomplished through the enrichment of the $ GME and $ AMC executives and institutional shareholders, let’s focus on the following:
Pigs can fly. Anything can happen as soon as you enter a trade. Stocks can stay irrational longer than you can stay solvent. Many short sellers failed because they didn’t manage the risk. This is your number one priority on every trade.
$ AMC was trading below $ 5 in February. When $ GME hit $ 500, $ AMC saw a nice surge to $ 20. $ AMC had its blow-off top in late May where $ GME had it in February. Similar story to $ GME: Bankrupt company that bought out avid retailers and shorts were destroyed.
The lesson is the same as in $ GME: manage risk, prepare for all scenarios. For retailers holding $ AMC and $ GME, these are great short term trading opportunities, not long term investments. Nail and bail, don’t stay and pray. These will eventually come to earth.
$ PLUG is an EV battery maker that saw a massive run up ahead of the election and after it earlier this year. It’s a classic example of the “Sell the News” track. Biden’s presidency was expected to be beneficial to a wide variety of EV companies based on the expected guidelines.
It had a massive run for inauguration. Once that happens, the massive sell-off across the industry will begin. This is a pattern you’ll see over and over again: buy the rumor, sell the news. Don’t get caught up in the hype and buy into heights.
We chose this graph to show the strength of the sector rotation. $ BIDU is one of the leading stocks in the Chinese communications sector. As with the electric vehicles, it was a hot industry at the beginning of the year. And then ALL air came out of all the Chinese names. Once all the good news is priced in, the sellers pour in. It’s hot until it’s no more.
One of the stocks of the year. With the introduction of the vaccine, it has been on a steady upward trend for months. For us it was a daily stock for day trading that offers a wide range and liquidity. The top can be in there, who knows. But it will still offer great shorting opportunities.
Upstart is a great company in a promising sector that has been blazing hot all year round. Much like $ MRNA, which has been a daily trader for us for the past few months, it was trading at $ 30 earlier in the year and is now trading above $ 300. It’s a stock to keep on your watchlist every week, it has great reach and liquidity. Be on the lookout for these momo names, they can make or break your trading year.
Make sure you study hundreds of charts every day. Build muscle memory for patterns.
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