It’s April 2, the day of Trump’s highly anticipated tariffs.
The market already fell 10% from the highs in February. That was due to a few initial tariffs and the threat of more tariffs to come. Now it’s for real …
Plus, The U.S. economy just started to show signs of slower growth as a result.
Look at the heading below from April 1:
Wall Street is worried!
And the U.S. consumer is about to break …
Look at another heading that I found on April 1:
I hope you’re not on the ropes 😢
There’s no reason to panic. We’re still seeing opportunities to make gains in this market!
For example, yesterday ReShape Lifesciences Inc. (NASDAQ: RSLS) spiked +600%* intraday and showed us a perfect opportunity.
There is a process for success in this market. You don’t have to go down with the ship.
Breakout Trades On Short Squeezes
RSLS is not the first short squeeze that we’ve seen …
- Regencell Bioscience Holdings Limited NASDAQ: RGC) spiked 1,500%* over eight days, starting March 12.
- MicroAlgo Inc. (NASDAQ: MLGO) spiked 1,100%* over seven days, starting March 24.
- iCoreConnect Inc. (NASDAQ: ICCT) spiked 1,700%* in two days, starting March 31.
These short squeezes are extremely explosive.
That makes them great opportunities for breakout trades.
A stock will spike, usually in the morning, it consolidates during the middle of the day. Then it shoots upward in the afternoon.
It’s a simple idea. But executing it can be difficult.
First of all, we need to be sure that we’re watching the right stock.
The strongest short squeezes come from:
- Low-priced stocks.
- With bearish news or no news at all (to lure in short sellers).
- And a low float (anything below 10 million shares).
For example, yesterday, when RSLS spiked +600%* …
- It started below $0.50 per share.
- There wasn’t any news to spike the price.
- And StocksToTrade shows that the float is only 676k shares.
The Breakout On RSLS
Every stock spike looks a little different.
But the more times you see these patterns in the market, the more quickly you’ll be able to recognize them in real time.
Look at the RSLS chart below, every candle represents one trading minute.
The stock spiked in the morning and set a solid resistance level around $1.40.
At 12:30 P.M. Eastern, the stock shot through that level and halted up.
A trader could have:
- Bought shares in the consolidation in anticipation of a retest of $1.40, and a possible breakout.
- Or bought shares after the breakout during the momentary consolidation before the price pushed higher.
In both cases, there’s a defined risk level where we cut the trade if it craps out.
Sell your shares if the price falls below the consolidation level. That’s a sign the price could fall even lower.
Always remember that nothing is a 100% guarantee in the market. It’s essential that we follow trade patterns and rules to keep our accounts safe.
What are the chances our trades crap out?
Well, we only focus on the best plays to minimize our risk. Remember the factors that make a short squeeze …
- Low-priced stocks.
- With bearish news or no news at all (to lure in short sellers).
- And a low float (anything below 10 million shares).
My trade tracker shows that I win 76% of the time …
One of my most successful students, Jack Kellogg, only wins 56% of the time.
Keep your losses small and your profits will shine through.
Look for more breakout trade setups this week!
Cheers.
*Past performance does not indicate future results
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