There was no shortage of play yesterday — with the biggest gainer spiking more than 350%!
… and I think I like it.
Those kinds of gains might not make sense to some people — especially short sellers.
But as the famous saying goes: The markets can stay irrational longer than you can stay solvent.
These moves don’t have to make sense.
In the end, logic prevails. But in the short term, these low float stocks can spike higher than you think.
So today I’ll break down this massive gainer and show you the perfect way to play it. Long- and short-biased traders, pay attention to this lesson!
Another Beautiful Short Squeeze
NeuroSense Therapeutics Ltd. (NASDAQ: NRSN) is a sketchy biotech with roughly seven million shares in the float.
Yesterday in premarket, the company announced FDA clearance to initiate a study of its ALS treatment. The Breaking News Chat team alerted it when it was trading at $2.05. At the open, it was up 39% and traded sideways…
Playing the dip and rip was a more aggressive trade. The more conservative trade was waiting for the afternoon VWAP-hold, high-of-day break. In total, NRSN gained over 350% yesterday. And it was a standard long setup:
- Sketchy biotech
- News catalyst
- Low float
- Massive float rotation
So why do shorts keep shorting low floats with news? And what made NSRN gain over 350% when other squeezes only spike 35%?
Let’s dig deeper into this epic short squeeze…
If you missed it yesterday — watch this video to learn how to ride short squeeze momentum.
Why NRSN Squeezed Over 350%!
Shorts love sketchy news. The sketchier the news, the more biased short sellers are…
They don’t think about share structure or supply and demand. Instead, they’re blinded by their opinions. They think the news isn’t that good and the stock’s up too much. To them, it just doesn’t make sense.
In the case of NRSN, the FDA clearance was just one step of many before drug approval. The treatment won’t be available tomorrow.
So what did shorts do?
They piled in the stock risking the premarket highs. Once that level broke, they looked for the next area of resistance — the March 1 high around $3. After that, the only resistance level on the chart was the all-time high of $4.70 from its IPO day.
Once that level broke, longs are green and short sellers are in the red.
Shorts got caught trying to guess the top. And every time it went higher, they all had to outbid each other to get out.
NRSN’s gain on the FDA news might not make sense, but it doesn’t have to…
Whether you’re a long- or short-biased trader — the market doesn’t care what you think.
It’s up to you to trade the right patterns and price action. If you’re a long trader, the dip and rip and afternoon VWAP hold in NRSN were great trades. If you tried to short NRSN, you need to learn the right short setups…
Nothing on the NRSN chart yesterday made it look like a potential short.
Never short a low float stock with news on its first green day. Instead, look for a multi-day runner that cracks VWAP after 2 p.m. and use the day’s high as your risk and stop. Then cover into the late-day fade.
That’s a higher-odds short setup and way less risky than trying to guess the top in a low float runner.
Join the SteadyTrade Team to learn how to avoid getting caught in these wild squeezers on the short side and how to take advantage of them on the long side.
Yesterday my morning plan on NRSN worked beautifully…
If you’re missing out on these massive moves, prepare for the next one here!
See you back here tomorrow.
Lead Trainer, StocksToTrade