Looking for Money Monday trading action today?
We finished off last week with a ton of great plays on Thursday…
Not only did artificial intelligence stocks bounce back…
But former runners you might have forgotten about did too.
Remember a 1,782% runner from a couple of months ago? It bounced 60% on Thursday…
And a 224% gainer from last month spiked 32%.
It’s not surprising to me … Because these spikes repeat and they happen on a predictable day…
Here’s what you can learn from these spikes and what you can look forward to this week…
Could Last Week’s Action Continue?
Since Friday was a holiday, Thursday was basically a Friday before a long weekend. And what do we look for every Friday?
Especially before a long weekend. Why?
Because short sellers don’t want to hold their positions over a long weekend…
That increases their risk of macro news coming out that could impact their positions. And they have to pay borrowing fees for holding short positions overnight. Fees can be quite high for hard-to-borrow stocks.
That’s one of the reasons we saw artificial intelligence stocks bounce on Thursday. (See all three reasons they bounced here.)
It’s also the reason we see moves like this in Troika Media Group, Inc. (NASDAQ: TRKA) on Thursday morning and after hours…
TRKA chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
TRKA is a former spiker that’s been beaten down over the last few days and shorts wanted out before the long weekend…
TRKA chart: 10-day, 5-minute candle — courtesy of StocksToTrade.com
And remember Motorsport Games Inc.’s (NASDAQ: MSGM) 1,782% gain in January and February when it went from roughly $3 to 49.50 in two days?
MSGM chart: 6-month, daily candle — courtesy of StocksToTrade.com
After getting beaten down all the way back to the $5 level…
MSGM had an afternoon squeeze on Thursday and spiked all the way up to $8.88!
The yellow resistance line I placed on the chart around the $7.50 level back on January 31 was back in play…
MSGM chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
You can see on the chart, that the break above $7.50 is where volume came in.
So what do these spikes mean for this week?
We like short squeezes on Fridays — but they can happen any day of the week.
And once short squeezes are triggered it can lead to more upside depending on how big the initial move was…
If you see a stock have a massive spike, chances are most shorts are out.
But if you see a small spike then some sideways action — that can mean more shorts are stuck and are holding it up.
So we want to see artificial intelligence stocks and recent squeezers from last week hold their gains … And that could mean a day or two of sideways action…
We want the stocks to form key levels we can trade off. Then we look for it to break those key levels for more potential upside. And the lower float the stock has — the better.
A ‘frothy’ overall market could also help.
If you want my updated plans throughout the week — get my Market Update videos three times when you join StocksToTrade Advisory here.
Have a great Money Monday everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade