Happy Friday, Evolvers!
I hope everyone spent this week trading your game plans, not chasing alerts, and taking proits quickly.
The major indexes had an unremarkable but overall positive week as traders attempted to find price stability in the wildest, most news-driven market I’ve seen in my 10+ year career.
Meanwhile, my prediction that oil stocks were overdue for a pullback seems to be coming to life, as the entire sector was red yesterday.
Insane meme stock Revlon Inc. (NYSE: REV) also had its first red day yesterday. But as I mentioned in my last letter, the options were too expensive to justify the risk/reward of buying puts on Wednesday.
But enough small talk. It’s time to answer your questions. Let’s get into the Friday Q&A…
Is REV’s short squeeze a sign that meme stocks are making a comeback?
I’ll need to see more than one puny short squeeze before I’m willing to declare that meme stocks are back. Quite frankly, I don’t think they are. Not in this market.
Do you know this mystery man?
He’s just discovered one of the most powerful ways to take on this bear market as a trader…
All from exploiting one tiny niche of the stock market (only 4% of stocks) that can bring in 2x, 5x, even 10x BETTER returns than penny stocks.
And he just went live on camera to talk with the public for the first time.
Let’s look at the big picture…
GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings Inc. (NYSE: AMC) — the historical leaders of the meme stock universe — aren’t doing anything right now.
Furthermore, legendary investor Cliff Asness went on CNBC’s “Morning Bell” this week to let the world know he’d opened a short position on AMC. And no, it’s probably not a big enough position to trigger a short squeeze.
Then again, the languishing of GME and AMC might be making way for new meme stocks to take over (like REV).
It’s certainly encouraging to see a meme stock take off again. After all, these are the plays I love to short the tops on more than anything.
REV’s wild ride could also be an early bottoming signal for the overall markets. This is a big ‘maybe,’ but there hasn’t been a big momentum move like this throughout the entire bear market.
Could REV’s bullish momentum be a signal that retail traders are ready to fire back into the options market?
I wouldn’t say that yet. I still think REV is an outlier move based on unique conditions that won’t be repeated any time soon.
What separates your top students from the 90% of traders who lose money?
If I had to pick one trait that separates the incredible traders I know (like Tim Sykes) from the 95% of trades that lose — it would be their ability to accurately identify the mistakes they make.
It’s easy and gratifying to pat yourself on the back after a big win.
But it takes real self-reflection (and humility) to take a long, hard look in the mirror and ask yourself what parts of your strategy you could improve.
As a trader, you need to be hard on yourself in this way. Don’t beat yourself up, but be ruthless in pointing out what you’re doing wrong. That’s step one.
Step two? Eliminate those errors from your trading.
This is easier said than done, but it’s crucial if you want to become a stock market mastermind, like my top student, Jenny Smith!
Jenny doesn’t have any fancy financial degrees. In fact, before she found Tim Sykes’ Trading Challenge and Evolved Trader, she had zero experience trading.
And just like every newbie trader, Jenny made a ton of mistakes in the beginning. But instead of basking in the parts of her strategy that were already working — she obsessed over the areas that needed improvement.
Before long, Jenny was identifying extraordinary patterns and executing remarkable trades — entirely on her own.
These days, she’s bagging gains of 700%, 6,200%, even 27,000% on a single trade!
— Jenny Smith (@jpsmith5804) March 23, 2022
— Jenny Smith (@jpsmith5804) March 16, 2022
Jenny’s growth as a trader is truly remarkable. She’s made nearly $200,000 in trading profits, and trust me when I say she’s just getting started. If you wanna hear more about Jenny’s incredible journey, click here!
So, take it from Jenny. If you’re honest with yourself about identifying the aspects of your trading that need improvement, you can potentially reach heights you never even imagined.
As always, thanks for the questions!
Remember you can send me questions anytime on Twitter @thehonestcroock!
Have a great weekend, Evolvers! I’ll speak to you all next week.