Dear Friend— Jeff Bishop here,
The market was full of mixed news in the EV space yesterday.
Nikola (NKLA) led the selloff on reports that its new supply deal with GM would not feature an equity stake. Meanwhile, Chinese EVs NIO, LI, and XPEV also took a tumble throughout the trading session.
This morning, we're seeing a bounce back in these EV stocks — NIO was trading higher in the pre-market after it announced a record-high number of monthly deliveries.
Now, that's not the only major headline for EVs.
There was one bright spot at the end of yesterday's session. It was announced that TSLA shares would be added all at once to the S&P 500 and the stock spiked from the $570 level in the after-hours.
With these hot stocks reaching lofty valuations, it's reasonable for traders to question whether we're witnessing an EV bubble right now. To be quite honest with you, valuations haven't mattered for a while.
That's why in today's issue of All-Access, we provide examples of strategies we can use— Dark Pools scanning and Trend-pattern-squeeze (TPS) setups— to arm ourselves to trade EV stocks right now.
Yesterday's chart of the day is CAAS.
This Chinese small-cap managed to close up 174.15% on the day.
So, what happened?
The first thing to note, China Automotive Systems Inc manufactures power steering systems for the EV makers in China.
Yesterday morning, the company gave an update on its YTD sales —120k units. They also estimated 2021 sales to be 200k units.
The combination of investors' excitement about Chinese EV plays and the low float of CAAS (12M shares) made it a perfect candidate for a rally.
Here's what the intraday chart looks like:
As we can see on the chart, the trade itself was very straightforward once the stock broke above the swing high: get long, put our stop right under $6.5, and let it rip.
The difficult part, however, was to keep this stock on our watchlist until the moment it started to look good again: CAAS failed to break out right on the open and looked like a potential all-day fade.
This stock looked interesting in the premarket: a Chinese EV play with lower float gapping above its range…
But, as you see, there was no good trade in it in the morning. If we completely forgot about it once it failed, we would have missed the substantial run later in the day.
The lesson here is simple: if we liked the stock in the morning but the trade did not happen, we should not give up on it entirely. Instead, we can keep it on our watchlist and set some alerts.
If the trade does not develop, we will just delete it after the close. But if the setup comes, we'll be ready to take advantage of it.
Don't forget to get familiar with the clues on the chart. It can help us interpret the action during the day the next time an opportunity comes around.
Join this trading workshop to learn how Ben Sturgill uses a dark pools scanner to spot moves on hot stocks like EVs. Last week, it even spotted activity in NGA, a special purpose acquisition company (SPAC) that announced yesterday it's merging with Lion Electric.*
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Over the past month, many of our letters focused on short squeezes— and not for a lack of good reason.
To us, short-term traders, these setups often provide the best of what we look for, all in one place:
As we explained, there's really no rocket science here.
The mechanics of a squeeze are simple: people get caught on the wrong side of the trade.
Then come really huge squeezes when people get caught badly.
The beauty of it is that some of the greatest moves— TLRY, ACB, APRN, even TSLA— happen over a multi-hour and even multi-day period.
We don't have to be the first ones in— in fact, it's often beneficial to be in the back of the train.
We'll still get where we're going— but by the time we're in, we're pretty darn confident it will take us where we want to be.
When it comes to low-floats in general and squeezers in particular, we love waiting for the confirmation and get in only when the next leg starts to prove itself.
CAAS is case in point here, you didn't have to be in at 9.35am.
If you waited until 2pm, not only would you have seen obvious support, but also a clean 50c risk area to trade against.
Below, we present 3 stocks that are showing just that— continuous support higher and a risk area we can buy against:
HEXO Corp (HEXO):
FuelCell Energy (FCEL):
Nano Dimension (NNDM):
FCEL and NNDM are showing characteristics of Nate Bear's trend-pattern-squeeze (TPS) setup. Join Nate's upcoming 10X trading workshop here to learn how he's taking large gains with this setup.
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Yesterday was a good day for the shorts— a number of hot stocks, like the EVs we already mentioned, took a hit.
A lot of traders are refusing to touch them with a ten-foot pole right now, and we can't blame them.
But hear us out…
A lot of times, after a nice run of say 30%, stocks need to take a breath before making the next move higher.
In other words, they enter a consolidation or "squeeze."
You might be thinking we're talking about a short squeeze here— the shorts are on the wrong side of the market, the buyers come in and drive the stock higher, and the shorts get "squeezed."
However, the squeeze we're talking about is an indicator, known as the TTM Squeeze— a very important part of Nate Bear's three-step system known as TPS.
You'll see the TTM Squeeze on all of Nate's charts— no matter what time frame, whether it be day trades or swing trades.
It's his edge in the market.
Basically, what the squeeze tells you is when there's a compression in volatility or price action.
He uses the squeeze to time his entries and his exits.
Here's a look at what we're talking about here, which handed Nate a 150% win on NIO back in mid-October...
Right now, we're seeing a similar setup happening in NIO. The stock was on the move, and now it's showing some consolidation.
With a 33% short-float, this could set up a short squeeze that could send shares up another 50%.
Take a look…
Once again, join Nate's upcoming 10X trading workshop here to learn how he's taking large gains with this trend-pattern-squeeze (TPS) setup.
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Will These Coins & Stocks Rip Higher? By Jason Bond of Jason Bond Picks
BTC Breaking Out: Here Are My Thoughts By Jeff Bishop of Total Alpha
Two Ways To Short TSLA Safely By Dave Lukas of Options Profit Planner
[Watchlist] 3 Stock Poised For E-Commerce Gains By Ben Sturgill of Daily Profit Machine
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