Pump and dump lesson

Good morning,

See what I mean by pump and dumps?

These algos are manipulating nanocap low floats and anyone who buys retracements is getting destroyed. 

Case and point. 

CRKN is a tiny $1.65M company with a small 12.59 float. 

This morning algos spiked from $.12 - $.18 in just 6-minutes.

50% in minutes on heavy volume.

Only to punish any traders trying to enter the backside of the move.

I've been seeing this every morning lately.

Here’s another from this morning.

SPRC from $4’s to $9, also in just 6-minutes. 

Backside retracement traders buying for continuation smashed to pieces. 

The problem?

Algos are manipulating the front side because the market cap is tiny and float is small.

SPRC is a $14.7M, bigger than CRKN, but it’s float is ONLY 2.45M.

A nanocap is a market cap of $50M or less. These are the smallest of companies.

Combine that with a low float and manipulation is rampant. 

BE CAREFUL is my point.

I favor $100M - $300M companies because hedge funds will trade them. 

The price action on them is more predictable, yet still volatile enough to be fun.

Just look at CCCC, which I alerted and traded in Jason Bond Picks yesterday.

$198.15M market cap.

41.92M float.

BIG DIFFERENCE in the price action. See it?

Jason Bond Picks smartphone alerts from Tuesday.

Wednesday’s CCCC #1 in the entire market.

Key takeaway. 

Trading in the premarket is risky because markets are thin to begin with. 

Better to wait for the news to settle in after the 9:30 AM ET open and if a trend is established, like it did on CCCC, then make a trade plan.

I only made about $1,000 day trading CCCC, a little wimpy on my exit, I know, but it was a more predictable $1,000 and what I consider less risky.

Moving right along. 

This just came into RagingBull support and well, Steve, you made my week. 

Okay, so what’s next?

Wednesday I’m light on my feet. My only JBP holding is my core long-term LQMT position, which is looking good. Now that the CEO bought about a million shares a few weeks ago, near this price, I’m paying much more attention. I’ve been in this for years and would love to get a big exit. I’ll have a more detailed update for you soon but suffice to say, there’s finally something to be excited about here. Least I think so. Details to follow. I think it trades between $.10-$.20 soon. A big liquidity event is what I want to see and that’ll take the right piece of news for it to happen. There’s reason to believe that might be around the corner, more thoughts to follow. 

Other than LQMT, no new trades for me today ahead of the interest rate decision and Powell press conference. Other than day trades on names like CCCC, I don’t want a lot of exposure into what is certainly going to move the market in one direction or the other. I lean towards bullish here. My rationale is CPI Tuesday and PPI this morning show inflation is definitely coming down. Rates are not likely to go higher and a recession appears to have been averted. Only question then is if Powell is dovish or hawkish in his 2:30 PM ET call today. I suspect dovish given the election is coming but I also doubt he’ll shed any light on when rates might start to come down. I believe they definitely need to start bringing them down because young people can’t afford rent or housing right now, which will change how they vote in 2024 if that doesn’t change. All this to say, I’ll have 2 swing trade ideas at 3 PM ET if and only if the market does not sell off after Powell. More to come there.

We’re in chat talking stocks and options. Join us.

Jason

p.s. 10 FREE Futures trading lessons (sale ending, last chance to watch free)

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