Day Trading the Recent Reverse Split Squeeze

what's up everyone all right so in this episode we're going to talk about a b v c this is the anatomy of a trade I'm going to go over the trades that I took on it this morning and help kind of slow down everything that happened within a very short period of time this is a stock where I made over ten thousand dollars you could see my p l uh right here so uh ten thousand three hundred nine dollars and sixty six cents and it happens quick when the stock is moving all of a sudden just like that we've got action and a big part of day trading really is sitting and being patient it's a small part of trading that's actually being in the trade it's kind of a funny thing we spent a lot of time sitting waiting a lot of time studying a lot of time preparing and then a very short period of time actually being in the trade but of course that's time that counts so in the case of abvc let's talk about why I traded it what I liked about it and of course my entries and my exits so first we could set the stage uh this is a stock that had a recent reverse split you can see the S on the chart right here someone asked just the other day on YouTube Ross how do you know if it's a reverse split and not a traditional split well you don't usually see traditional stock splits on small cap companies and if you look at the daily chart and it looks like this it's most likely a reverse split a stock that's going to do a traditional split well Apple for instance Apple has done traditional splits um there was a split back here uh as you could see it's this is a chart that just keeps going up and so you know every like five years or whatever they do a split Tesla's had a split so it's pretty easy just by looking at the daily chart to see whether or not this is a stock that most likely has done a split going up or a traditional split or is a reverse split because the chart's going down so abvc is reverse split what do we know about stocks that do reverse splits well a company does reverse split because they have an obligation to keep their stock price above one dollar a share and what happens is the price goes up but the market cap doesn't change so the only way a Stock's price can go up without the market cap changing is if the number of shares outstanding goes down and so just like a traditional split a traditional split it's the opposite but in a reverse split the float goes down so let's just say for instance and what we can actually check so abvc was showing a 20 million share float but that doesn't reflect the reverse split that just happened yesterday and it was a ten to one reverse split so now the float is 20 divided by 10. it's basically a 2 million share float so the float dropped substantially overnight as the price went up so you have this trade where float goes down price goes up all right so what we know about that is when we have a stock that's been beaten up for a really long time and then all of a sudden they have a reverse split the companies tend to put out news very closely following a reverse split because now the stock is at a normal price and all of a sudden with a low flow the stocks can move very quickly you can have a huge imbalance between supply and demand and so one of the setups that over the years of my career I've traded and I teach in our Warrior Pro curriculum is the reverse split setup so the candidate for reverse split trade is a stock that has done a recent reverse split it can be within a day it could be within a month or two months but it's a fairly recent reverse split the stock should be priced between two dollars and twenty that's my typical price range it should have ideally news but sometimes they just start squeezing up and you've got to jump on that momentum if you want to participate you if you wait for the news it may just not happen so if it's squeezing if it's moving I jump on and ride the momentum uh the relative volume is almost always going to be high you can see this green Candle on the daily chart this had today over 20 million shares of volume let's see it's 33 million shares of volume today and yesterday it had 151 000 shares so the relative volume ratio on this is 1656. that's crazy anything above five is good that would mean it has five times higher volume than the previous uh 14 day average this has 1600 times higher than the six than the 14 day average so that's terrific like super high volume good liquidity and that that's really sort of the criteria so that's in terms of the the stock just period now I like it when we have a lot of room up to the 200 moving average this one didn't have as much room as I would like the 200 is at eight we had one the other day where the 200 was at like 50 bucks and the stock was at five dollars so that one had a lot of room up to the 200 moving average um you know in a situation like this that would be a little bit better because then you start you're like well this could could actually go up to 22. it's very common that they'll squeeze up towards the 200. so the 200 on this was a little closer than I'd prefer uh but not the end of the world all right so that's really the only thing I look at on the daily chart what's the proximity of the 200 moving average uh but for the most part I'm not looking very closely at this could be like a resistance level because this was when it was a penny stock and it was on such light volume I don't think it's really significant now if it got above the high of this pivot here I probably would have looked at this area as possible resistance and then I would look at this candle the top of that you know you've got a big window there but we didn't get to those areas so the stock pops up um on the early side this morning let's see and I saw it pop up I saw it hit the scanners and I I didn't trade it at the time that was right here so it goes from 440 up to 520 pulls back pops to 540 but then Rejects and you've got that red volume bar and I was like well I don't know it's kind of I I just didn't really like that high volume red candle so I didn't think much of it uh but I did notice at the time that it popped up that it was a reverse recent reverse split and the price was fine and the float was quite low so I was like okay that's one to keep an eye on now this morning our leading gapper Simo this one was higher priced uh I'm not sorting by change from the close I'm sorting by a gap higher price so didn't care about that one abvc was our second leading gapper and there were a couple others here but they weren't that interesting so this did end up becoming the most interesting stock and basically what happened was all of a sudden right here on this candle it pops back up to V web it hits a high of five right there it pulls back and as it broke over five that's where I was like it's time to buy so I took my first position I tried to buy at five dollars so I saw this little pullback here I pulled it up I had I already had this on watch just because it was a recent reverse split and I thought it was worth keeping an eye on um and just for a reference um bjdx this was a reverse split setup from uh two days ago and let me just show you this chart this one went from seven bucks to fourteen dollars a share now what's funny about this one is I thought it would do it like right here it halted up and then it just sort of stalled out and came back down it was sort of weird that this one made the move at like 12 30 in the afternoon but in any case um that was just the other day so reverse splits right now are hot all right so um and abvc all right so abvc uh so as it pops up to five I'm like okay I want to get in at five with a stop at around 490. so generally this is a setup right around the half dollar whole dollar psychological resistance and in this case I pressed my buy button but the moment I pressed it it was already starting to break over five and I got filled at 507. so that was a little bit of a bummer um it was higher than I wanted to fill but I got filled at 507. it squeezes up to 5 15 and I added at 5 20. so now I have a cost basis of like five thirteen or so and it squeezes right up to 550 at the half dollar it then does a micro pullback I tried to add I didn't get filled it breaks that level and then as it squeezes up to 565 and 575 I added at 575. at that point looking for the squeeze up to six dollars we got it it went up to a high of 620 and I took profit at 596 595 and 588. it then dips back down and I added 2500 shares at 570. it pops back up to a high of like 590. I took the profit off the table for maybe 10 cents a share it drops back down again to 575 I added at 575. I had again 565 so my average was 570. it pops back up to 580 or whatever it was got out again with a small winner it dips again this time it hits 547 that was right here and I added at 549 buying right under the half dollar that was a good trade but I only filled small size on a 2000 share order it was a partial fill just is what it is unfortunately and I did a couple trades there so buying these dips um and you know those were fine but it kind of felt like this was the big move and then it just sort of went into this period of consolidation where the winners got smaller and smaller and smaller and smaller then we had our opening range and the high the opening range here was 566 of this first one minute candle it was sort of struggling but you know what there wasn't a single red candle two four six eight green candles in a row and as it squeezed up right here I got back in so this was now at the open so let me zoom up to this trade so I got back in at 561 and 563 to anticipate the break of 566 this level right here all right it squeezes up there to a high of 578 it dips down then it breaks 78 and squeezes up to 610. nice it pulls back then it pops up here to a high of 643 and then it did something that I thought was kind of interesting I called it the Headless Head and Shoulders pattern so uh it goes up to like 5 30. 538 and it was uh sort of sideways and then it had this a kind of nasty sell-off that was right here and I was like that's interesting it almost looks like a head and shoulders pattern except there's no head so the head of a headless should head and shoulders pattern it should have broken here and gone up to like right in this area and that would be the head but it kind of just did like shoulder no head so a headless man and then uh or a woman that's could be any it could be anything it doesn't matter it doesn't matter it's just headless it's a headless horse person headless horse person uh we got to be politically correct so this is a headless horse person and it just dips down and then and then it flushes so I was like that was funny that was interesting then it comes back up here and when it came back up here I was like if this thing breaks 6 43 uh we might see a squeeze up to seven so I added as it approached that level right here and look at that we got that nice big green candle a 30 Cent candle took the profit into that that put me up over 10 000 on the day and uh I didn't trade it uh beyond that I just said that's good that's good enough for me 10 000 is a great day that's uh twice my daily goal daily goal is five thousand uh finished just under the daily goal yesterday on aurc and um you guys can check out the anatomy of the trade on that one this was a little bit of a different setup it's a special acquisition company so why don't you guys check out that episode uh if you enjoyed this episode anatomy of a trade on abvc I hope you hit the thumbs up I hope you subscribe to the channel you can always come over to daytradash.com or warriortrading.com if you want to check out my tools that I'm using the scanners and the charts or if you want to check out my classes and uh why don't you guys uh go ahead and watch the anatomy of a trade on aurc coming up next I think you guys will enjoy that and I'll remind you guys as always that trading is risky and my results are not typical and there's no guarantee you'll find success whether you trade on your own you learn from me so manage your risk take it slow don't try to blindly follow me or anyone else and practice in a simulator before you put real money on the line all right enjoy that next episode on aurc the SPAC Breakout foreign