Small caps have always made the biggest moves in the market. Cheap China stocks can go vertical and double or even triple in an afternoon. A lot of small accounts are built from finding and exploiting those moves…
This is a BRAND NEW way to target MASSIVE MOVES.
But these cheap stocks reverse as fast as they run, and they often get halted in the middle of the move.
For most of my career I traded small caps … nothing else in the market gives you that kind of juice.
But this year the big names have started moving like the small caps. The difference is how the large caps behave once they start to move.
The bigger names tend to hold their moves longer, and don’t reverse as fast as those crappy China stocks I used to trade all the time.
Last week I had one of each on at the same time. The big name worked, while the China stock took my money in minutes.
So before you ignore the big names, let me walk you through both trades, and show you how to take the big-name trade with a small account.
Sandisk Corporation (NASDAQ: SNDK) topped on September 23 with the market at all-time highs. After that the market held or made new highs, and Sandisk kept falling.
I shorted it on October 9 as it turned back down, and I carried the short over the weekend. My average was about $1,625.00. I was risking about $15.00 a share, with my stop at the October 9 high.
On October 12 it gapped down with the market and kept falling after the open. I covered all of it that morning. The gain was over $100.00 a share.*
The same morning, while the Sandisk short was working, I was also short a Chinese stock called WF Holding Limited (NASDAQ: WFF). It had run about 500% on October 9, and I shorted it at $12.00 as it came back down.
Then it reversed higher. Within minutes I was down $5.00 to $7.00 a share. It ran past $50.00 in about an hour.
2 days later it closed at $0.18. The drop came from the same people who had pushed the price up selling their shares.
When the price drops, the buyers near the top are forced to sell at a loss. When it jumps, the shorts are forced to buy back at a loss. The only trade I know that works in a stock like WFF is buying while the shorts are being forced to buy back, and selling the same day.
Whether you’re trading the move up, or shorting the move down, these violent moves are so hard to time.
Sandisk gave me the same size move with way more time to take it. But for most of you, that trade has two problems. Sandisk costs over $1,000.00 a share, and you can’t short in a small account. You can get around both with one fund…
How To Trade SNDK With A Small Account
Tradr 2X Short SNDK Daily ETF (CBOE: SNDQ) is a fund that moves about 2x as much as Sandisk each day, in the opposite direction. If you can’t short, buying this fund is the same bet as shorting Sandisk.
Tradr 2X Long SNDK Daily ETF (SNXX) is the same 2x exposure, but in the same direction. So if you want to bet on Sandisk going up, I like this ticker a lot.
The 2x is measured one day at a time, so over a week, the fund’s total move won’t necessarily be exactly 2x Sandisk’s total move. I hold it for days at most.
Let other people lose money on the Chinese stocks. I’d rather take the same size move in a big name, with time to get in and time to get out. With this fund, a small account can take that move too.
This week I’m watching Sandisk for the next one. And I’m watching another setup as well…
Sunday at 7pm Eastern, Tim Sykes and Lance Ippolito are showing a brand new way to target 100%+ moves in the first hour of the trading day, and giving away thousands of dollars in prizes to the people who show up.
And It’s FREE.
Save your seat for Sunday night.
Stay sharp,
Jack Kellogg
*Past performance does not indicate future results
