As YahooFinance reported, September 13, 2022: “Headline inflation came in at 8.3%, dropping a meager 0.2% from July, and falling short of the expected 8.1%, according to the latest data from the Bureau of Labor Statistics”.
The news seems to have halted any temporary recovery of the $SPY but fortunately for many day-traders, short opportunities still exist in the market - $HKD being one of the more common stocks played by day traders.
It’s good to remember that it’s okay if there hasn’t been endless opportunity, it’s about staying in the game.
Some day traders may have heard of Jack ‘Treetop’ Straus. Jack was down to his final chip in the 1982, World Series Of Poker Main Event, yet he went on to recover everything and win.
While there are many differences between trading and poker, the point is: everything can turn on a dime.
Lesson: For guidance on the state of the market watch our brand-new webinar with Tim Sykes here.
The Return of $HKD
From late July to early August, 2022 $HKD made one of the biggest runs many traders may have ever witnessed in their history of trading stocks. It ran from around: $60 - $2,555 in a matter of a few days, totaling a: 4,000% plus move.
Subsequently, it gave nearly all of its gains back. This potentially means that anyone who didn’t sell their long position may have been left stuck holding this stock for an unrealized loss. These people are often referred to as “bag holders”.
A common day trading pattern often utilized by traders is to short then next bounce after the stock has made a major move, due to this rationale that there may be extra selling pressure due to “bag holders” exiting their positions.
Lesson: Hear Jtrader’s thoughts on $HKD in this recap videohere.
Fast-forward to Episode 2: HKD
$HKD’s extreme volatility makes it an extremely difficult trade to the long and the short side. However, once the whole number $250 line broke, the stock fell through the line and never recovered.
On this occasion, day-trading this particular pattern worked, but keep in mind that every trade is different.
- In trading, like in Poker, things can change on the flip of a dime.
- If a stock has ran once but gave back most or all of its gains from the run, that can create a potential short-biased trading opportunity due to bag-holders.
- When key levels break it can often indicate a potential spot to place a trade.
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- Yahoo Finance: | New Inflation Figures Spell Trouble for Equity ETFs: Accessed 19/6/22 (https://finance.yahoo.com/news/inflation-figures-spell-trouble-equity-200000383.html)
- YouTube | State Of The Market | Dan Pipitone & Moe Saidi interview Tim Sykes: Accessed: 19/6/22 (https://www.youtube.com/watch?v=JIsfkQRDa-Y&ab_channel=TradeZero)
- YouTube | Talking Tickers: August review with JTrader & Stephen Johnson: Accessed: 19/6/22 (https://www.youtube.com/watch?v=JZega1gfN5M&t=3s&ab_channel=TradeZero)