We just have TWO stocks go up over 1,000% 🤯

What's up everyone? All right, in today's episode, we're going to talk about how it is even possible that it's only Tuesday and yet we've already had two stocks this week that have gone up over a,000%. Typically, when this happens, I would say we're in a very hot [music] market. But I don't know if that's really the case here. Something is going on and we've got to dial in, figure out exactly what it is. And so, let's begin by talking about the common denominators between these two stocks. We had one yesterday and one today. So, we jump on the screen share and start breaking it down. Yesterday, we had ZYBT. ZYBT. If we back this up on our five-minute chart, we can look at this. You can see this stock. It's a it's an unbelievable move. I mean, these charts are just insane. So, it's down at 60 cents a share and it rallies all the way up to 90, up to a dollar, up to a$120. Boom, it's up 100%. Then it goes up to a $140, $150, up to $2. It pulls back for a moment here. Then it surges up to 250. Now it's up 200%. Goes up to three, up to 360, 300%. It pulls back, it squeezes up to 4, 450. Now we're up over 500%, 600%. And after hours, it was halted into the close. And it resumed and squeezed up to 1150, stopping out short sellers only to flush all the way down to $2.50. That's an 80% drop right there in less than 10 minutes. Wow, that is a roller coaster. Okay, so what was the catalyst? This stock must have had some incredible news, right? Surely it did. Surely it did not. There was no news. So that's the first common denominator. All right, so the profile of this stock yesterday, it's a Chinese company with absolutely no news. The company even put out a headline commenting on the unusual trading activity. Their headline basically said that they are not aware of any material non-public information regarding the company, its business, financial condition, or operations that would account for the recent increase in trading activity in its securities. So, in other words, they're just shrugging their shoulders. They we have no idea. We don't know. It's a 5.6 6 million share float and all of a sudden yesterday it traded on over 160 million shares of volume. Chinese stock with no news. Today, CPHI, a Chinese stock with no news, goes from less than a dollar a share, 5060 cents, very similar to the other, goes up to two, pulls back, goes up to three to four, pulls back, goes up to five to six, pulls back, goes all the way up to a high of nearly $20 a share. I mean, this one was was even more insane. I mean, this is absolutely ridiculous. 2,212% move. Wow. No news, Chinese stock. And again, the company comments and says, "We don't know." Shrugging our shoulders, "We have no idea why our stock is up 2,000% at the peak today." So, how is this even possible? What's going on here? All right. Well, let's think about this for a second. Number one, we know that the market has been fairly warm. July has been a little slower than June. June was the best month of the year so far for me. So, the market really did heat up in June. July, it's been a little cooler, but still we've been seeing some big moves here and there. It's kind of like one day is hot, the next day is cold. One day is hot, next day is cold. Now, this week, we've had kind of two hot days in a row. So, I think what's going on here is that there are a lot of traders that are in the market. They're looking for opportunities, but both long and short. Now, last week we did have a few stocks that gave us some pretty big rejections. And actually, we had a pretty big rejection um just on um on Monday. Look at this one. So, this stock squeezed up here, rallied up, reversed, came all the way back down, ends up being, you know, red on the day. Just on the week now, this thing is down off of off of the high. So, let's just look at this. It's down like 90% from its high up here around $10 down at, you know, a dollar a share. So, there are traders in the market that are momentum traders looking for a trend that's beginning, looking to jump on that momentum as early as possible and ride that wave as long as you can. That's the type of trader I am. I'm a momentum trader. And then you have reversal traders, counter trend traders, traders who buy stocks that are really weak and traders who short stocks that are really strong. Shorting stocks that are really strong is risky business. And this is, I think, the exact reason why these made such big moves. Because think about it, you have a stock that's up 100% 150%. Logic is telling you it's not going to hold these levels. Of course, it's not going to hold these levels. There's no news. It's a Chinese stock. We've seen this story before. They pop up, they pop up, they squeeze, and then they dump. They give it all back. And sometimes these stocks are part of WhatsApp campaigns where people are, you know, messaging everyone saying, "You should buy the stock. You should buy the stock." It's essentially a pump and dump. And we don't know. I have no idea. I don't know if anyone's been sending WhatsApp messages on these stocks. But because that has happened many times in the past with Chinese stocks, there's a lot of traders out there that think, you know what, anytime a Chinese stock is going up, I'm going to look to trade it to the short side. I'm just going to start adding as it squeezes higher. So essentially, it gets up to 100% on the day and as it's up 100%, I'm going to short a,000 shares. So a,000 shares short at $2. It goes to $3, I'm going to add another thousand shares. Goes to $4. All right, now it's going against me. I'm going to add another,000 shares. It goes to $5. Surely this will be the top. I'm gonna add now 4,000 shares. I'm gonna bring up my cost basis. And here I think it's going to roll over. And then it goes to 650 to 7. And they're like, "Oh my god, what do I do? Do I keep adding?" Well, I should keep adding because now it's even more extended. The reversal will be even bigger. But now to get your cost basis that much higher, now you've got to add like 8,000 shares. So now all of a sudden you've got, you know, whatever 15,000 shares, some big position. And then it goes to 10 to 12 to 14. You double again. Now you take another 15,000 shares. Now you got 30,000 shares. It's against you by 10 points. You're down 300 grand. All from a 1,000 share starting position. That's insane. It's terrible risk management. And yet the problem is, and this is this is why I don't like counter trend trading. The problem is the more extended it gets, the the more you justify to yourself why this would be the worst place to cover because you know this is the most extended it's ever been. It's going to reverse. But can you continue to hold while it gets more extended? And most people cannot. And so the result then is when people are now flipping to cover that position and they have to buy 30,000 shares on the open market, right? You buy well whatever 30,000 shares or even a bigger position and you're doing that in between halts as it's squeezing higher and higher and higher. And so what you notice was very common when these start halting like this is that as it squeezes higher the volume actually declines. the liquidity declines. So, yes, you get this really big move and it was easy to add big size in here and in here and in here, but now it's hard to get out because, you know, there just aren't as many people willing to buy it up here as a sort of organic long bias trader. The the majority of people buying are shorts who are covering. And yes, you've got people who are selling and taking profit, but you have a decline in volume as the price goes higher, which means it's harder to get out without slippage. And so all of a sudden, you know, a few really big short sellers with a couple hundred thousand shares are easily pushing this higher as they're covering and using market orders. Now, something that I think is really interesting is that um a popular short selling broker actually made an announcement and they said, "If you're short this, you should cover right away. Um this is very risky." And uh I thought that that was really interesting that they said that. Um because they they basically were uh it almost seemed like an admission that there were some traders at the firm who were heavily short and the you know all of a sudden it so let's just play this out. How many of you guys saw INHD from um a few it was like a month ago or so. So INHD we have to take it off that chart. Um so this stock ended up squeezing up on the daily. You can see here it makes this huge move, squeezes up, um goes absolutely parabolic in one day. I thought it went higher than this, but it goes it shows a high of $43 a share and that was on um June 8th and then it got halted and it got halted on a T12 halt. So that that type of halt is pending the company providing more information to the exchanges and the stock will remain halted until the company provides the information that's being requested. So now a month has gone by. The problem is if you are holding a position on this, you cannot sell it. Now if you're long and you're in it, you're just stuck and you know it's an unfortunate situation to be in. Nobody wants to be in that situation. But the halt was in the afternoon and if you were holding in the afternoon and now you've been holding it for over a month. But if you were short, you're also still holding it. Okay, no big deal, right? Well, it is a big deal because every single day you continue to pay borrowing fees. So, the borrowing fees on this stock were really high. So, you're now potentially paying hundreds of dollars, maybe thousands of dollars per day in borrowing fees. What if you can't afford to pay them anymore? Then all of a sudden, your broker is essentially, you know, your the broker is the one that ends up holding the bag. they might try to collect from you, but if they can't collect from you, then, you know, they're in a jam. So, when a broker is saying, "Hey, don't short this stock. This stock has, you know, is very risky. It has a risk of being halted on T12 halt," which arguably both this one today and the one from yesterday both had the risk of getting a T12 halt. Um, both of them were up over a,000% with no news. And if you had shorted it and you got caught holding it, then you have to pay borrowing fees every single day until it resumes. You don't want to do that for a month. So essentially, they were like, if you're thinking about shorting this, think again. Get out. We don't we really don't want anyone at the firm shorting it because then you're it's just going to be a problem. Just so don't do it. So now as it's they're telling you that as it's squeezing higher. So that's two things. is a signal to long biased traders that maybe there are some shorts that are in a jam here. And number two, that you'd have to be crazy to think about shorting these because of the risk of holding it and having to pay borrowing fees every single day. So now the only people selling are people that already own the stock, not people who are shortselling. I mean, again, there'll be exceptions. There'll be some people who take the high-risisk short. And as you can see here on ZYBT, if you got it at 11 back down to three, you did great. But if you started down here at two or three and you kept adding and adding and adding right in here as it squeezed to 10 or 11, it was pretty scary. And it wouldn't shock me if there were some people that panic and covered here thinking, look, I've seen these go to 28, 38,48, $50 a share. We've seen some go up over $100 a share. You will blow up your account. You could end your career. And so the reason I don't like short selling, I mean there's a number of reasons, but one of the reasons, number one, I don't like having to deal with cost to borrow and paying locate fees. Number two, I don't like dealing with short sale restriction and having to short on an uptick. Number three, I don't like counter trading, counter trend trading, because the more extended they get, even when I'm red on my position, I just feel like it makes even more sense to add and it's really hard for me to go against the logic and get out of a position when it feels like it's going to reverse even harder. And so that has created stubbornness in me where I've taken some really big losses shorting, but also buying weak stocks because I don't cut my losses quickly enough. Whereas for momentum trading, I don't have and training the long side. I don't have to worry about the short sale restriction. I don't have to worry about cost to borrow and I can just get in on a pullback and ride the momentum. I don't have to try to predict a reversal. When the reversal happens, it's very clear and I get out of my position. So, so yesterday we had ZYBT. no new stock. Today we had CPHI, no new stock. Well, what are we gonna have tomorrow? Um, and here's here's the deal. I didn't trade I took no trades today. I didn't trade in my small account. I didn't trade either of these stocks um yesterday or today in my big account, ZYBT. I didn't trade yesterday. I didn't trade CPHI today. Mostly because these moves started below a dollar. And I typically find that when stocks start below a dollar, usually they're choppier. These were exceptions. They did end up making big moves, but they also occurred kind of in the middle of the day, which is not when I'm typically trading. And one of the reasons is I don't like dealing with halts. Um, you know, I used to be okay with it. I used to trade a lot of halts. Um, but in the last couple years, I found that the momentum is a bit cleaner when you don't have to get caught up waiting five minutes on a halt or maybe 10 minutes or longer. The problem with these halts is sometimes they halt high and then open low. Sometimes, you know, they they halt down and then they open higher. It just there's a degree of kind of unpredictability and you're just sort of a a bit vulnerable when you're stuck in a halt. So anyway, so I didn't trade either of these myself. Um, and interestingly, on the one hand, if these moves had occurred during pre-market or after hours, you wouldn't have had the halt levels. So, they could have made a bigger move, but I think the fact that they occurred during regular trading hours made maybe it feel safer for shorts to add. And so, they kind of fell into this trap. They got squeezed two days in a row, which is which is pretty bad. Um, so, and interestingly, both the charts look kind of similar. CPHI squeezes up, comes back down, and then does another rally from $8 here up to 16. That's a nice move. That's actually probably an even cleaner move even though it's on slightly lighter volume. ZYBT sort of similarly had the initial big squeeze right here, pulls back, pops up, pulls back, and then pre-market goes from three back up to nine. So, I almost wondered if this was going to be in play today if it could get back over five and six, but it it wasn't able to do that. So, we didn't get uh I didn't get any trades on it. You know, my feeling is we've known for a long time that Chinese stocks can give us these really big moves. Um this is nothing new. I mean, I've got an entire chapter of my Warrior Pro curriculum dedicated specifically to Chinese stocks because this is not I mean, it's just not uncommon. We've seen this kind of stuff happen a lot. And so, it's one of the reasons that I I I will trade these Chinese stocks. I'm just going to grab a screenshot of it. Um, but I generally say I'm going to approach them with caution and for I think the logical reason that um they can be unpredictable. You can have what seems like a really nice move and then all of a sudden you're getting like this massive flush where it drops, you know, like that. Those types of candles are very scary. You do not want to be in a stock doing something like that. Um, and usually when a stock shows the potential to make those kind of moves or have that kind of drop, I just say, you know what, I can't trust it because it's just not worth it. I just don't want to take the risk, um, you know, and take the the loss that could come with, um, you know, with with trading this type of thing. So, um, pre-market, I'm a bit more inclined to break the ice on them. And yes, trading a Chinese stock with no news is certainly risky. I'm gonna um you know I'm gonna disclaim that as always, but uh it's not a requirement for a stock to have news. Yes, it's part of my five pillars of stock selection. So when a stock doesn't meet that fifth pillar, then I approach it with a bit more caution, but it's not my uh feeling that I should just disregard it entirely because we have had enough times where, you know, you've had a no-w stock like this that goes up, you know, 4 500% or whatever the case is, a,000%. And it seems that it would be silly to say, "Oh, I'm never trading something if it has no news." You'd be missing a lot of uh opportunity. So, you know, tomorrow on the one hand, I would say, yeah, I guess we should probably look for a Chinese stock with no news. That's the theme. But gosh, I don't know. It feels uh it feels pretty strange to disregard a stock that potentially has genuinely good news because instead we'd rather trade a Chinese stock with no news. That's kind of a backwards market. Uh but, you know, so I I don't know how I feel about that. Uh but if I see something moving and it's clearly got momentum during the window that I'm trading, then you know I'll I'll break the ice. I'll give it a try. But um I I'm I'm going to just have to be a little bit cautious. One thing I would also say is that sometimes after um you know two or three uh of you know trades sort of back to back like this, traders start to think, okay, I know the theme. So the next Chinese stock that pops up, they're like all in on it. Um, this is a Chinese one. And they're like, "Oh, I'm, you know, I'm gonna load the boat on this." And then then that's when you catch this massive rejection, you know, like this, I don't know, whatever. Maybe the company was in on it. The company's like, "Oh, we are going to dump shares to these stupid retail traders, these, you know, whatever." And so then you get burned. So you got to be a little careful. Um, you can't just assume that every Chinese stock is going to make this move. obviously the ones that are making the move um the the company doesn't appear to be selling otherwise I don't think the stock would be able to sustain those levels I mean they're not selling in a very meaningful way at least so other company other uh Chinese stocks the the company could be selling uh very aggressively as soon as it pops up and so then that would suppress its ability to move higher any longs that jump in are buying from the insiders selling and then volume stalls out all the long bias traders try to dump no one's buying and panic ensues and you get this massive flush. So, you have to definitely be careful about that because that's a real risk uh tomorrow and I'm sure probably for the rest of the week. So, my game plan uh for pre-market tomorrow is to take it easy, watch to see what's obvious. Uh, I will say we also had a stock at like 9:15 this morning that did have news. Um, which I kind of was a little peeved about because it was like 10 9 and I was like, "All right, guys. I don't think it's happening." And then like two minutes later, this stock VIVK pops up and goes up 300% right here. Now, this was legitimately on breaking news. Um, a $40 million AI headline. So, this one I just missed and I am bummed that I missed it. Um, but I thought the day was over and I just didn't I didn't think that we were going to get any breaking news headlines and I was not interested in trading a no news China stock. So, missed that one. But, um, gave you a nice first pullback, second pullback, big rejection at the third pullback right there. So, something to pay attention to. But in any case, um by the end of the day, it did give back quite a lot of its gain. So, uh that's fine. But I'll be back at it first thing tomorrow morning. And if you want to watch over my shoulder as I'm trading, the link for our twoe trial is going to be pinned at the top of the comments and in the description. So, you can check out the twoe trial. And during that trial, watch as I'm trading, but also use the same software that I'm using every single day for charting, scanning, and breaking news. So, I hope you guys check it out. Two weeks for 20 bucks. You're going to get a ton of value out of it. So, I will be uh streaming tomorrow morning 7 a.m. and I hope to see you there. Reminder, by the way, as always, trading is risky and my results aren't typical. So, please take it slow and always manage your risk before putting real money on the line. And with that, I will see you guys bright and early tomorrow morning.