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The Newest AI Stock Spike

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Written by Timothy Sykes
Updated 6/4/2024 4 min read
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I warned everyone to prepare for this week …

On Monday evening I posted a study reminder to X. See it below:

The next day, on Tuesday morning, we got a trade alert for MicroAlgo Inc. (NASDAQ: MLGO).

The company announced a new business partnership with WiMi Hologram Cloud Inc. (NASDAQ: WIMI) to collaborate on a quantum research center. Here’s an excerpt from the press release:

“(The center) is committed to becoming an international innovation platform for quantum information science, artificial intelligence, neuroscience and biology, and to lead towards a future where artificial intelligence and quantum science will go hand in hand.”

Notice that it’s an obvious AI catalyst … Both stocks spiked as a direct result.

MLGO turned out to be a better setup. Partially because the float was only 1.8 million shares, compared to WIMI’s 54.5 million shares. (The low supply of shares helps prices spike higher when demand increases).

Breaking news alerted the MLGO move before the market opened for regular trading hours on Tuesday. Take a look at the chart below, every candle represents one trading minute:

MLGO chart intraday, 1-minute candles Source: StocksToTrade

>> This is where we get Breaking News alerts <<

And it’s not over, we could see this stock turn into a multi-day runner!

Track The Price Action:

The most volatile stocks can follow popular patterns in the stock market.

See, people are predictable during times of high stress. And there’s a lot of stress in the stock market as a result of fear and greed.

We see this predictability* manifested as support and resistance lines. There’s a full support and resistance tutorial below:

https://content.timothysykes.com/wp-content/plugins/wp-youtube-lyte/lyteCache.php?origThumbUrl=%2F%2Fi.ytimg.com%2Fvi%2FT-_jjttg8Ss%2Fmaxresdefault.jpg

Stocks like to trade between support and resistance, building momentum, before breaking out higher or lower.

And when it comes to volatile small-cap stocks like MLGO, the moves can be explosive.

Those are the exact moves that we want to trade.

My students killed it on Tuesday, trading setups on stocks like MLGO. See my post on X below:

“Please show us an example, Tim!”

Sure thing, take a look at the intraday chart of MLGO’s move on June 4. I drew in a few support and resistance lines.

Every candle represents one trading minute:

MLGO chart intraday, 1-minute candles Source: StocksToTrade

Remember that resistance can become support and vice versa.

Notice the support and resistance occurs around whole numbers … Stressed gamblers prefer whole numbers. People are predictable.

It’s possible MLGO climbs back toward the breakout level this week using support levels that were already established by Tuesday’s price action.

MLGO spiked 860%* … But we’ve seen a handful of +1000%* runners in 2024.

Maybe we’ll see a follow-up move from Tuesday’s other small-cap runner, SOBR Safe Inc. (NASDAQ: SOBR).

It spiked 180%* …

Or maybe the next profit setup will be from a brand new runner alerted by Breaking News …

There’s SO MUCH opportunity in this 2024 market. Don’t ignore these plays.

Get involved!

Cheers.

 

 

*Past performance does not indicate future results

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* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”