Learning to Day Trade - Part 14

Friday Short Squeeze

$DCIX is part of the terrible Greek container ship stocks ($GLBS, $DRYS, $TOPS, $SHIP, $ESEA) that all went supernova near the end of 2016 with $DRYS being the leader. On Thursday they did a reverse split which causes the stock price to increase by removing shares from the float. A lot of the time this gets people interested in the stock and it will sometimes cause really nice spikes.

Occasionally, you will get insane squeezes like what happened this Friday. I’ve marked the obvious support levels that would have been great entries.

$DCIX 1 minute candles

  • Buy 1,000 shares at $5.00 ($5,000 investment)
  • Sell at $19.00
  • $14,000 profit

Obviously you could never capture that much of the move but the potential is certainly there. If you can recognize a huge squeeze like this, you could hold it most of the day until 2:00 PM or so - assuming you have a good entry price.

These types of plays can happen on Friday’s because that’s when shorts will cover because they do not want to hold over the weekend. Combine that with a terrible company, low float, and how many people want to short it. You end up with a massive short squeeze.

I saw it premarket and watched it spike at the open. I had thought about an entry at 9:37 AM near $5.15 - selling into $5.40 (high of day). It sold off sharply so I ignored it and watched another stock.

Dip Buying OTC Morning Panics



Disclaimer

I am not a registered financial adviser/broker/anything. Use this information for entertainment/informational purposes only. Any tickers mentioned are not recommendations to buy/sell/or sell short. They are used as examples only.