Transcription
What's up everyone? All right, so in today's episode, we're going to talk about a biotech stock that squeezed up 288% on breaking news this morning.
Now, I had a couple problems with this stock. The first was that the company chose to put out the news at 6:30 a.m. Eastern Standard Time. That's a big mistake. Here's the problem. Most retail traders can't begin trading until 7 a.m. So, if you put out news at 6:30, you're not going to have nearly as many people participating in the response right after that news comes out. You will have some traders who use brokers that allow trading beginning at 4:00 a.m., but that total number of traders is smaller. And so what ends up happening is the news comes out earlier, the market is a little bit thinner and yes, the stock squeezes up but on relatively lighter volume versus if that same headline had been dropped an hour later at 7:30. So that was a mistake by the company. Essentially, they sort of took the wind out of their own sales by putting out the news at that time.
Nonetheless, the stock squeezes up. So now coming into 7 a.m. I'm sitting down as many other retail traders are and we see the stock is up 200% and it's the leading gainer, but no doubt we feel like we kind of missed the move. Now at least it's a biotech stock with news. The last week or so we've had a number of companies that have been squeezing up but they've been foreign listed. Chinese, Singapore, Malaysia, they've had no news and we're like what's driving this price action? And we don't really know. So maybe we trade a little bit, but we're a little timid. In this case, it's a biotech company and it has news. So we're like, okay, at least we have a basis for taking a trade even though it's up quite a bit. But because we missed the beginning of the move, any trades up in that high area while it's already up 200%. It's a bit extended. And so I found it to be very choppy. But I was able to break the ice and get some trades on it.
However, at exactly 12:19 p.m., they put out news offering selling more shares, but not a direct offering on the open market, an offering as a private placement with accredited institutional investors. Now, you have to understand the difference between these two types of offerings. When they do an offering where the underwriter, the bank, sells shares right on the open market, what happens? Well, in order to raise $23 million, which is how much they raised at $2 a share, they'd have to sell, you know, nearly 12 million shares directly on the market. Imagine 12 million shares of selling volume. Imagine a million shares sell order. These are huge sell orders. So, if we jump on the screen share here, as of right now, BJDX has total volume of over 60 million shares. It's 68 million. So 12 million shares would be like 20% of the volume today. It could it have tolerated it without totally tanking? I suppose it could have tolerated some of that but you know it wouldn't have been great. So that would be a direct offering.
Now this is a private placement. So if we click on it, private placements can be bullish and they actually can be a positive catalyst for a company because what a private placement is, it's the company selling shares directly to an institutional trader. And so now the institutional trader presumably here in this case is writing a check, a big check. And if they're going to write a big check and they're going to be holding that many shares, they're going to do a certain level of due diligence, that doesn't even happen when the underwriter sells directly on the market. When the underwriter sells on the market, what essentially has happened is they got shares from the company, their newly issued shares, and they just sit at their computer pressing the sell button, and it's retail traders like you and I who are buying the shares. I mean, if we want to, we're seeing these big sell orders, but we're buying anyways or they're just selling as the stock is dropping and anyone who's sitting on the bid is buying those shares. So, with a direct offering, there's no due diligence by the investors. The investors are typically become bag holders and they're retail traders, which is not great. But with a private placement, it's an institutional trader who is taking the shares and writing a check to the company. So it's a it's a sort of off-market transaction.
So now this institutional trader has all of these shares. But in this particular case, there's a little bit of a problem. Not only did they get the shares at a discount, but they also got warrants at a discount. In fact, the exercise price on the warrants is $2.7 a share and they're um affect they could be exercised immediately. So now we have this situation and you know we we hate to be skeptical but we have this situation where you've got an institutional investor who knows they can buy all of these shares at $2 a share. So even if this hasn't yet closed would they take a short position on this when it's up around six seven or eight because they know they can cover it when they get those warrants exercised down at $2. they're going to make a profit of $2 of in this case $4 a share. If they short at six and they cover at two. Now, even if the price goes higher than that, it doesn't matter because they've now boxed their position with a buy order for the warrants at two and the sell order at 650 or 7. So this is what we worry about is when we have these companies that are prone to do offerings that they'll do it. They'll exercise that that right and then we as retail traders are the ones caught holding the bag which is why it's important to make sure we don't overstay our welcome.
So in this case you had the first pop and a little pullback but that was at 630. Then it goes higher up to about 645. It pulls back and then we squeeze right here. That's the five minute chart. Let's zoom this into the one minute chart. This had an interesting divergence. So here we have the first squeeze up, a little bull flag, a pop higher. Notice the top two candles form that tweezer top. So what do you know about tweezers? They hurt, right? You get pinched with a tweezer and it hurts. They have these two little tops here and that indicates selling pressure. Each time the stock popped up, it pulled back. Then it pops up, then it pulls back. Comes up again, rejects. Well, we already had these topping tails. It's not a surprise. Then it pulls back, comes back up right here. And right before 7, it rips through 550. This price right here, breaks through 550, pulls away up to 6, 650, up to 730. Another topping tail, a heavy rejection back down, sells off. And what happens here? The MACD goes negative. So the moving average convergence divergence indicator goes negative, and we have this deeper pullback right down here. We start stairstepping down. That right there was 7 a.m. and we dropped down even more. Then it starts to bounce up here and I thought, you know, this kind of looks like a head and shoulders pattern. And I'm interested, but our MACD is negative because this pulled back too much. We had the big topping tail and then we dropped down a little too much. If we had had just a more gradual pullback here without that topping tail and we hadn't dropped this much, the MACD might have stayed positive, but it didn't. So, I didn't feel comfortable taking this trade right here for the curl up. But we double top at 7:30. We have an almost perfect double top. And then we start pulling back here, which gives the creation of the cup and handle pattern. Nice little cup and handle. The handle's a little long in this case, but that's all right. So the MACD is still negative.
But what I noticed, I zoomed in one step further to the 10second time frame, and this is what I noticed. I noticed that we had this trend line here, right under here. I drew it. So, oops, sorry. Let me show you exactly the lines I connected. I connected right here and right here. The low of this pullback with the low of this one. Now, I could have drawn it differently, but I just sort of snapped it on like that. And I noticed that it seemed like this was resistance back here, support right here, and then it also kind of tied in back here. Now, again, you could draw these slightly differently, and depending on how you connect it, it might maybe it's a little more accurate there. H that seems pretty accurate back there. Realistically, the way a trend line like this would have been drawn was from the first candles uh that first created it. So, like maybe right in here like this. And that does seem pretty accurate.
So, here was the trade that I took. It drops down, it pops up, drops down, pops up, drops down. At this point, I drew the ascending support line. It then comes down again, and I said, I'm going to buy it down here. So, I took my starter down here at $6.80, 80s and it pops up to 720 and then flushes all the way back down to 650 and I was like yikes gosh I didn't take my dream today. I wasn't expecting a roller coaster. So we had this big pop up this big drop down. It comes back up. I went from green on it to red back to green and I sold the majority of my positions. It came back up right here and then it rips all the way to 860. I sold the rest of my position into that squeeze and then it rolls over and comes all the way back down and I said, "This is this is unbelievable." Um, now I have whiplash. This is just crazy. I'm not taking any more trades on this. And that was it. I did not take any more trades on it. So, my only trades were right in that area for $1,72323. Hm. Well, that's a little bit of a bummer. I was unrealized red probably $3,500, something like that. And then when I came back to green, I was like, just take it off the table. That was not what I was expecting at all. So, it was kind of a close call. It was not clean, but that was early. So, I had, you know, a little cushion there at 7:19 a.m. And I'm like, "All right, highest volume candle of the day, big rejection. Going to leave that one alone." And as we can see, we've got the news that comes out later in the day of the second of the private placement. um and the market has reacted negatively to that uh mostly because the price uh is lower and probably because those warrants are exercisable immediately. So with that that was it for BJDX.
So then you know we're thinking all right well you know is something else going to pop up? Are we going to have anything else that comes into play today? And the fact was there were a few other stocks that popped up but nothing really felt safe. Now, by the way, those of you guys that are tuning in on YouTube, if you haven't already checked out a two-eek trial, during your twoe trial, you can use this software right here, the same software I'm using for charting, scanning, breaking news, and you can listen to my broadcast while I'm trading. You also have access to some classes from the Warrior Pro Curriculum, so you can get a better sense of the strategy that I trade every day. So, there's a link, by the way, pinned at the top of the comments and in the description where you can check it out.
So, then we get a move on GXAI. They come out with this news secures additional funding from Amazon AWS to accelerate AI sales platform development. Pretty cool. But how much money? How much money? The additional AWS support strengthens the push into the multi-billion dollar sales technology blah blah blah blah. Well, I don't understand that. We use AWS at Warrior for some of our uh servers and AWS will pay us to do some certain stuff. They'll well they'll basically pay for it. They'll say, "Hey, we'll pay for this for you because they want us to use AWS." So, you know, how much money we talking? 10,000 bucks, $50,000, 5 million, 10 million? We don't know. And if the number was big, I think they would have told us. So, I'm left to speculate, and we can only speculate. And uh so, unfortunately, while it did get an initial squeeze up, it starts to unwind and stair step down. So, that one didn't work. No trades on that.
Uh QCY floats a little higher on it. 21 million shares. Pops up. Didn't take any trades on that one. That was 7 a.m. Let's see. So then we had lobo a little cheaper. Not interested in that. I thought it was a little too cheap. Um, let's see. Then coming up to 8. SP AI pops up on the scanner again. This one's popped up a bunch of times. It doesn't tend to resolve very well. So no trades on that. And then we had CODX. Cooddx hits a scanner with a catalyst. It seems very topical. Um, it's advanced Ebola PCR test. Okay. Well, we know, you know, what's going on in Africa with Ebola right now. So, that's possibly a good catalyst. But unfortunately, there's not a lot of money there for probably even buying these tests. I mean, you know, if you've been co watching any of the coverage, there's not even the money for for you know, the the medical equipment like masks and, you know, gloves and stuff. So, I I don't know that even if this was a very successful test if it would be utilized there. Now, it might be utilized in wealthier countries to screen people coming in and out, but um but I'm I'm not sure that we're going to get to that point. So anyway, so then that uh although it squeezed up a little bit, rolled over HKIT, this one popped up a little bit off the lows. And then they announced an $8 million registered direct offering. So that's much more bearish. See how it drops much much harder? That's those are those are classic. So that's a big sell-off there. All right, so that one ends up dropping. Um, and actually this one, well, so technically, uh, this is a Chinese company, um, entered into a definitive agreement with certain investors for the purchase and sale of approximately $8 million, including 4 million class A at a value of unbelievable. H how how did they sell the shares for basically nothing? That's unbelievable. For one and a half cents. That's insane. Yikes. And then they also sold warrants um with a purchase price of $2. Geez Louise. Well, you're taking zero risk when you it's just it's just classic. It's a Chinese company. You shouldn't be surprised. So, here's the deal. This one already was really crazy yesterday. Double top. Big dramatic double top. Couldn't trust it at all. So, um you know what? It is what it is.
I I think right now what we're waiting for is the next strong catalyst. We know that we've got the SpaceX IPO coming up. We know we have the end of the pattern day trader rule coming up. So, we've got some catalysts in the near future that should drive momentum in the markets. And right now, it's time to batten down the hatches and wait it out till we get uh something that looks a little bit cleaner. So, today it's a small green day. Yesterday was a small green day. So, right now, I'm kind of grinding on these smaller numbers. Um but here's something that's kind of exciting. My Roth IRA, I began this year with $96,000 in it. It's now up 10x. I've done a million dollars of profit. Now, I'm a little behind where I was last year at this time. Last year at this time, 2025, uh gosh, I was probably already over 2 million. Let's see. So, uh I was at 2.5 million. So, I am behind where I was at last year at this time. Uh the market's been a little bit cooler. Um but last year, I also started with uh quite a bit more money in my account. This year, I reset my account back down in January, as you'll see right here. And so, I started with $96,000 in the account. So, my return this year is much higher than last year, but the total profits a little bit lower. Now, at the end of the day, I'd rather have the profit than the return. Um, but I dropped my account down in part because the market was cooling off towards the end of the year last year, and I just I didn't want to have the money in my account to make a big mistake. And so I thought, let's just drop it down, keep it smaller to start, and then just grow. And at this point, with a million dollars of buying power, I'm not being held back at all by not having enough buying power. That's not the issue. That's not why I'm not making more money. And it hasn't been for, you know, the last, you know, two and a half months. It was really just the first few weeks that it was holding me back. But at this point, what's holding me back is the lack of good catalysts. So hopefully we get some more nice headlines here um in the coming days and weeks. And uh as always, I'll be trading starting at 7 a.m. So I'll see you guys bright and early tomorrow morning. And let me remind you as always, my results are not typical. Trading is risky. So manage your risk and take it slow. If you hadn't already checked it out, I've got a brand new small account challenge starting very soon, $2,000. Check out the episode to get all the details on that challenge. If you want to learn more about the SpaceX IPO, I've got another episode on that as well. So, with that, I hope you guys have a great rest of the day, and I'll see you bright and early tomorrow morning.