Small cap, large cap — it didn’t matter…
Degenerates were desperate for a play on Friday.
And any trashy China stock would do…
Because after a stock goes from $35 to $155 in one day, everyone’s looking for the next one.
And the action we saw on Thursday and Friday could start a hot market theme if it gains traction.
So, if you missed it — here’s what sparked the run in these stocks…
And what I’m looking for this week…
What to Watch In The Markets This Week
Huadi International Group Co., Ltd. (NASDAQ: HUDI) kicked off the momentum in Chinese stocks on Thursday…
The company announced it’s entering the clean energy space.
The Breaking News Chat alerted it when the news dropped in premarket. And look at this incredible move… 
It doesn’t look like much on the chart, but the stock had a $5 per share move in premarket after the news came out.
And it traded in a range of $8 per share before it dipped roughly an hour after the open.
When short sellers saw that dip — they wanted out! And the squeeze was on.
After hitting $70, HUDI consolidated throughout the day before having an even bigger epic squeeze into the close. It eventually topped out at $155!
But this isn’t just a random move that’s fun to talk about because it’s so insane. It followed a repeating pattern…
You can’t see VWAP on the Breaking News Chat chart, but HUDI followed a textbook afternoon VWAP hold high of the day break pattern.
And on Friday it kept going and brought other Chinese stocks with it…
Sentage Holdings Inc. (NASDAQ: SNTG) was the small-cap sympathy play — but other larger-cap Chinese names were also moving…
NIO Inc. (NYSE: NIO), XPeng Inc. (NYSE: XPEV), Li Auto Inc. (NASDAQ: LI), and other Chinese stocks all gapped up as well on hopes that their government will ease Covid restrictions.
And they’re in the same clean energy space that HUDI announced it’s entering.
I’ll be watching to see if the momentum continues in these trashy stocks this week.
If you see a bunch of Chinese stocks show up on your scans, you know we’re in a potentially hot theme…
And big runners like HUDI can create market themes that can last for weeks.
But if you don’t like trading these Chinese trash stocks, I won’t yell at you. Focus on what’s working for you.
If you’re struggling to find opportunities and want to know what I’m watching for the rest of the week, join me in Pre-Market Prep. I’d love to see you there!
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade