Trading Big Movers | Podcast Episode #399

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Hey, I’m Ryan Mallory and this is my Swing Trading the Stock Market podcast. I’m here to teach you how to trade in a complex, ever changing world of finance.

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Learn what it means to trade profitably and consistently, managing risk, avoiding the pitfalls of trading, and most importantly, to let those winners run wild.

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You can succeed at the stock market and I’m ready to show you how. Hey everybody, this is Ryan Mallory with Swing Trading the stock market.

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In today’s episode, we are going to talk about trading big movers, big movers in the stock market stocks that are and we’re seeing a ton of them today.

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We’re seeing them with NVIDIA, with AMD, with SMCI. Pretty much all your semiconductor stocks, they they are just rocketing higher even stocks or somebody’s like MU Micron, they’re moving like crazy.

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You got Broadcom, usually a a really quiet semiconductor stock going through the roof.

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So that’s what we’re gonna talk about. How do you trade these big movers when you’re up a ton on these stocks?

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What do you do in today’s e-mail is the basis for this question. This comes from a guy we’ll call him Jeremiah at his request.

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He writes good morning. I have been listening to you for a few years now and have learned a plethora of information from you.

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I even got into Scotch and Bourbon drinking after hearing you tasting various ones.

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So thanks for elevating me to Gentlemen’s Status. Wow, that might be one of the best compliments I’ve ever been given.

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Helping somebody be elevated to Gentlemen’s status, he goes on the right. He says I am here in Albuquerque, NM and moved back here after spending thirteen years in the Navy.

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Thank you for your service, Sir. I was trying to think of a good old New Mexican type redneck name and thought of my childhood friend’s one named Jeremiah.

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I figured that would be a great start, hence why we’re calling this guy Jeremiah.

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Here’s a little background on my trading history. When we started receiving our stimulus checks and seeing the nose dive in the stock market, I had decided to put that into an ATD Ameritrade account and see what I could turn that into.

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I made some pretty big gains and was starting to be pretty confident in my trading and started trading on margin.

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At one point I was up about $12,000 but was heavily vested in MSTR.

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I didn’t practice a good stop loss and it took a big dive and I kept having the hope that it would go back up but it never did.

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And then I got hit with a margin call and well I blew up my account. So here we are again and I got into MSTR again at 488 and as of today it’s sitting at $1300.

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I have seen these big moves like NVIDIA SMCIMSTR.

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So what I’m struggling with is how to set up a stop loss on these big movers that can swing about 50 to $100 so quickly.

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Second, I am trying to figure out how to appropriately take gains.

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I have a feeling that a little Ryan is sitting on my shoulder saying take your profit and don’t sit on these highly volatile stocks.

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Wow, I like the background story there. A lot of you can relate to that background story.

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That’s why I like hearing the stories that you guys have because the more stories and and background that I have from you guys, the more the listeners are able to relate because so many of you guys got started during the COVID shutdown.

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I mean, tons of people did, right?

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I mean, there’s a huge influx of new traders came into the market during that time. And there was a lot of traders that started listening to my podcast shortly thereafter because of how many people were blowing up their accounts here, like Jeremiah and decided man, I need to really find something that’s going to help me out.

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So again, trading big movers, they’re very difficult. They’re some of the hardest stocks to trade because you’re sitting on so much profit and like anybody, you don’t want to lose that profit.

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You don’t want to be up like a 100% and then all of a sudden take a 20% loss on a trade.

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Nobody wants that.

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So they they can be very difficult, ’cause there’s a lot of emotions there. It’s like, OK, it’s it’s up 100%, but let’s say it doesn’t go up another 1000%. So do I really want to take my profits now and then be regretting it down the road that I did?

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So yes, Like what?

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A lot of people would say, it’s a good problem to have.

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If you take your money, you’re securing the gains and you’re walking away with a big check, but you may be forfeiting the potential to make a lot more gains.

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So good problems to have, but they’re very difficult problems to manage. And right now, as he said and as I already mentioned, there’s tons of stocks going through the roof.

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I mean, and parabolic fashion, like what we’ve seen with Smci where it was trading at, you know, $8485 just a year ago and now it’s trading at $1200.

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That’s some wild stuff. And I think what might be even crazier is nobody’s blinking an eye at it and it’s like, Oh yeah,

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let’s go initiate a buy. Smci actually had someone and I don’t even remember what it was.

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It was like a broker I never heard of initiate coverage on the stock after it was already trading like over $1000 and said, oh, it’s a buy. 1350 is our price target.

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Now, the thing about these firms, they’re not as smart as you actually think that they are because what they do is they do follow a lot of the hype.

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So they’ll see something like SMCI moving up and they’ll initiate coverage or whatever, and they’ll put their target out there.

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If it’s trading at 100, they’ll say, oh right, target at 150, hits 150 or 200, then they’ll raise it up to 200 and they’ll say, oh, we’ve been following the stock and we’ve been, we had a price target

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for 1300.

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If it goes down, then they’ll lower the price target or whatever. And so people get worked up about it.

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All they’re doing is a reaction to what it’s already done. That’s what Wall Street analysts are doing.

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You think anybody’s going to come out right now and say, yeah, we don’t like NVIDIA, we think Nvidia’s garbage.

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No, every one of them’s probably saying they love NVIDIA. I haven’t checked it, but I can tell you probably every one of them like it because they look stupid

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if they said otherwise.

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Yeah. Then all of a sudden the stock’s gonna go down and all the analysts are gonna be saying, yeah, we we’ve lowered our price target.

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Yeah, we we see this going much lower.

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That’s what analysts are.

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I think it’s wild. I think it’s crazy.

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It feels very reminiscent of what happened duringthe.com bubble. And one of the things that I’m seeing with all these big movers and the big move too, that the stock

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market’s made over 1000 points on the S&P since September, is that I’ve never seen so many articles out there trying to tell us that it’s not a stock market bubble.

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I actually think that’s one of the best indicators that it is a stock market bubble is when everybody’s telling you that it’s not a stock market bubble.

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And then they’ll also try to, you know, play 3D chess with you by saying it’s not a stock market bubble because everyone’s saying it’s a stock market bubble.

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I gotta be honest, I’m not seeing a ton of people that are calling it a stock market bubble.

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I just think they’re making it up.

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Yes, there’s articles out there, but when you look at the ratio of people trying to say it’s not a stock market bubble, it far outpaces the number of people that are saying it is a stock market bubble.

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So here we are, stocks that are looking like bubbles, stocks that are trading parabolic like NVIDIA SMCI, AM, D1 of the things you wanna remember and you can go back and see this kind of stuff back in 2022 with NVIDIA.

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You can see it throughout. History of these stocks is that when there’s big runs to the upside, there’s usually a big mean reversion.

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What does it mean reversion?

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It’s where there’s a pull back to like an average price over a set specific time. So with NVIDIA, it would make sense with as much as it’s been up, it’s up over 100% at one point, just in the first two plus months of this year, that there’s gonna be some kind of mean reversion.

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It’s gonna pull back some.

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And you should expect that it goes back to that saying about, you know, fighting the bully in the schoolyard, the one that the real big guy.

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He’ll say, oh, the bigger they are, the harder they fall. Well, that’s how it works with the stocks too.

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The bigger they are in terms of the bigger the rally, the harder they pull back stocks. With that kind of volatility, when the selling starts to happen, when they’re up that much, people are gonna be much more emotional.

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That’s why I was trying to say in the beginning of this podcast episode that that there’s a lot more emotion when you’re sitting on a lot of profits.

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And so when people are up one or two 100% on a stock like we’ve seen of late with NVIDIA, when that thing starts to pull back some, there’s a good chance that you’re gonna see some people sell out in mass.

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And when they do that, they’re going to create a hard push to the downside. And many traders are gonna get roasted.

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Because what happens is when these stocks eventually top out, there’s a few selling to a lot.

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They have big positions because of how much it’s gone up. So when they start taking profits and the stock starts to move lower, you’re going to have all those people who say, hey, it’s pulled back 5 or 10% here, this is a great time to buy into it.

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And then when it starts to these few people with big positions are selling to a lot of individuals to be able to absorb those big positions and so many traders will get stuck at the top.

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Even just this past Friday when I was looking at the call premiums, NVIDIA at one point pulled back 10% from its highs of the day.

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That’s what I mean by, you know, the the harder they rally, the harder they fall. At some point they will fall pretty hard.

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And NVIDIA just had a 10% swing in one day to the downside.

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Yeah, but there was $2.4 billion of call premiums purchased that day as it was falling.

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So the next day when it gaps way up, there was $1.6 billion of call premiums. That means at the at this particular moment where it started to pull back, there was 50% more in call premiums on Friday than there was the day following their earnings report.

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That is wild.

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And that means there’s a lot of people getting stuck up there and their premiums are going to crap and eventually they’re going to panic and they’re going to sell.

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Not a ton of people listen to this podcast relative to how many people were trading. I wish more people did.

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I think a lot of people could learn some valuable lessons.

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They see in video pull back and you know, 10% they’re not looking, OK, if I’m gonna play this, I’m gonna put, you know, a small portion of My Portfolio into this and be cognizant of the fact that these premiums could go to zero overnight.

10:56
Nope.

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What they’re gonna do is they’re gonna put everything into it, they’re gonna Yolo into it, and then all of a sudden they’re completely maxed out.

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Maybe they’re even in the margin. Then it starts to pull against them and they lose it all.

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And in the case here of Jeremiah, you get margin called.

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If you said to yourself at this point I will not hold it under any circumstance, that’s your line in the sand.

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That’s that’s your point where you’re saying, OK, I’m up 1000, let’s go extreme here. Let’s say you’re up 1000% on the stock.

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Maybe you say to yourself, OK, if it pulls back 20%, I’m going to go ahead and jump out of this trade.

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That’s my line in the sand and I’m, I’m trying to keep it simple just from a mathematical standpoint. I’m not saying that’s where you’re line in the sand should be, but the other thing too is that you have to take some profits along the way.

11:47
You have to take some profits along the way. There’s nothing wrong with it.

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So for instance, and I’ve brought this trade up a few times, but I I think I brought it up a few times just recently, but I have an AMD trade and and this isn’t the only long term investment I have, but I think it’s very relevant to what we’re seeing like with semis, ’cause I don’t have a ton of semi plays, I have like Intel and I have AMD.

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I bought AMD back last year and I think my average buying price was 59, didn’t even get a full position.

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But the, the, the amount that it ran, it was essentially like, you know, rallying into a full position.

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I bought it at 59. Now it’s trading at like 2:10, 2/20.

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I don’t know how high this one can go. So I sold half originally and then I sold another, I think it was like 1/6 or so to give me essentially like 1/3 of a position.

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And then even just recently, I’m just like, there’s times where I’m just like selling. It’s trading at like 220 at one point and perhaps it goes to 300 or 400 or $500, I don’t know, nobody does.

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But if I bought in at $59 and it’s trading at 2:20, that’d be crazy not to take some profits along the way.

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And that’s what I’ve been doing. Sometimes it’s only like a share that I’m selling a $200 share, but I’m just trying to make sure I’m taking at least some advantage of these price moves.

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I don’t have a big position left in it, but I still want to be able to maximize some of the opportunities that the stock keeps afforded me.

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So I think this past week, yeah, it reached 210, but I think my one of my exit prices might have been like either two O 8 or 210, but it was like a price that I had to take advantage of that.

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So even if it wasn’t much, I took something and most of my gains have been booked on this trade.

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It’s been a phenomenal. I shouldn’t even call it a trade.

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It was an investment originally. I was hoping to hold it for ages honestly.

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But also when I got into it, I wasn’t really expecting a parabolic meteoric rise in AMD that would take it, you know and and over just a little over a year from 59 to over 200.

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But with AMD, I’m in other trades too, like Shopify, believe it or not.

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I have a position in Robin Hood HOODI mean, I kind of hate the platform and everything.

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I think they kind of go traders into making stupid trades at times.

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And I think it’s almost too convenient to make trades on.

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I mean, so I I have stocks like Hood and I have stocks like AMD. I have some dividend stocks like LYB.

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But a lot of these trades or investments, I don’t know how high they’re eventually gonna go, but I’m gonna take profits along the way, because when it does come back one day, you’re gonna be glad that you took profits along the way.

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Gosh, that could be a saying or a rhyme.

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Something like when I look back one day, I’ll be glad I took profits along the way.

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But it can help change it for the better.

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But we shouldn’t make this trade like be life defining like this is what’s going to make the difference in my life.

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It can help improve it. It can help change it because it made you a lot of gains.

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But it shouldn’t be life defining.

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No.

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If you’re gonna be good at this, there better be a lot of long term investments, a lot of trades that are good for you.

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Because if we’re putting it all on one trade, essentially it’s like going to a casino table and put it in all on red or black man.

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If it doesn’t work out, you’re going to be a lot worse off.

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There are opportunities in 2022, there are opportunities in 2020, and there’ll be opportunities down the road.

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But you can’t put all of your hope and all of your trust in this one stock, because stocks will let you down.

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You give it enough time, they will disappoint you.

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Look at what a lot of your Apple investors are dealing with here so far in 2024.

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It’s disappointing them.

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It’s been a long time.

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And if you get stopped out too early or you take profits too early, so be it.

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And with Jeremiah’s situation here, he traded MSTR back in COVID days and he was up a ton. And then he blew up his account with that stock and now he’s back into the stock at 488 and it’s now sitting at 1300.

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And he’s having the same questions that he had back when he blew his account up in 2020.

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Will your exits ever be perfect in a trade?

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There’ll be people out there on Twitter that’ll tell you I got out on the top, man, nobody gets out perfectly on a consistent basis.

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You may, you know, obviously there has to be somebody that sells at a very market top because there’s there’s always a trade at the top, right?

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But those are like lottery tickets.

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Most of the time you’re going to get out somewhere in the middle.

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trading at 1300 around and you get stopped out on it and then it goes right back up, OK.

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It doesn’t care that you’re in it. It doesn’t care when you get out of it.

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It’s gonna keep doing its thing.

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But the thing that you got to remember is that there will always be another trade, another investment.

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And so you want to make sure that what happened to you back in 2020 with MSTR doesn’t happen again because you did the same thing once again.

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You know, you take GME from early 2021, You know, you have a stock that’s going from like $4.00 all the way up to like over $120.00.

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And there’s people that probably got in at like, maybe 10 or $15, and then they got out at $80.00, and then they watched it go from 80 up to 120.

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At the time, they were probably extremely, extremely upset. They were mad.

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Do you think they’re really that mad Today? Looking back, they’re probably going around and bragging to people.

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It’s like, yeah, I got in at 15, wrote it up to 80. Life’s good.

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Also, before I forget, you know what else is good? swingtradingthestockmarket.com.

17:56
Yes, this is a really cool service. It has a Discord feature to it.

18:01
You’re gonna get all of my stock market research here by going to swingtradingthestockmarket.com.

18:06
With it, you’re going to get my daily watch list, watch list, reviews that I do later in the afternoon, plus my weekly bullish and bearish list.

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Plus you’re going to get big tech updates on like meta, Amazon, Apple, Netflix, Google, Microsoft, Tesla.

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Did I say NVIDIA? I think I did.

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You’re also going to get updates on the overall market, so it’s a really cool service that supports this podcast in the process.

18:30
So I really do appreciate you guys checking that out. But back to GME.

18:35
Yeah, the the dude that bought at 15 and sold at 80, he thinks he’s a legend right now probably, and I don’t blame him.

18:41
He got the meat and potatoes of that trade. He didn’t stay for dessert.

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He doesn’t have to. He got filled on the meat and potatoes.

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He didn’t come for the appetizers by trying to get in as low as he could and waiting it out for months.

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Now he got in at 15. It rode up to 80.

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He did good. He more than forexed his trade.

18:58
But there’s also people out there that got him. Let’s say they got in at $20 and they rode it up to 120 and they watched it come all the way back down again to $10.

19:08
And then it bounces all the way back up again to over 80 and they still don’t take any profits.

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And then it comes back down to below 40 and then it pops back up again to 90 almost.

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And now they’re sitting at 1465 with a 25% loss on their hands so far.

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You don’t want that to be the case. You want to be the guy that, yeah, he didn’t get out at the top, he didn’t get out at 120, but he rode from 15 to 80 and he made a massive amount on his trade.

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That’s what you want to be. And what I’m using stops on these vertical plays, often times it’s very difficult to find a key support level when it’s going straight up.

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You look at NVIDIA right now, there’s not a lot of support underneath it.

19:53
But one of the things that I do watch is I start watching a stocks meteoric rise in relation to like a five day or a 10 day moving average, a very quick moving average and often times they will follow a particular moving average, sometimes it’s five, sometimes it’s 10, it might be even the 20.

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And I’ll start watching how does it trade relative to that moving average on a closing basis.

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And if it trades below it, then I’ll say OK, that’s my. Exit to get completely out of the trade or maybe you can make it a multi tier one.

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If it breaks and closes below the five I’ll take a third off. If it breaks and closes below the the 10 day moving average, I’ll take another third off and it closes.

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Below the 20 day moving average I’ll take another third off.

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Does that work with every trade? No, but I’m trying to give you some ideas.

20:32
I’m trying to give you some some help. Often times if that doesn’t work then there’s usually like a key support level that you can follow and say that’s my red line in the sand.

20:38
If it closes below it then I’m out.

20:41
So in summary, keep in mind that trading is more than just one trade. You don’t need one trade to define your life, for better or for worse.

20:51
It you you definitely don’t want it be for worse. But you don’t need to be gunning for stocks or trades that are gonna define your life and its meaning.

20:58
You really want just trades to be another notch in your belt, another investment that went really well and that you manage the risk on it.

21:04
Maybe you don’t get out at the top.

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Maybe you get out somewhere. You know, 2/3 up.

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Still good trade. Especially 10 years from now, you’ll probably be glad.

21:14
So with that being said, make sure to leave me a five star review on whatever platform that you’re listening to me on.

21:20
I love those. I’d love to hear from you guys.

21:23
Also check out swingtradingthestockmarket.com and send me your questions ryan@shareplanner.com. I do read them all.

21:29
I do try to make episodes out of almost every single one of them. So keep doing that.

21:33
My next podcast episode will be #400. Still thinking about what I want to do with that?

21:38
Maybe I’ll have a special bourbon that I pull out for that, I don’t know. Go back to the old days of when I was doing some of those bourbon reviews and do one on a good one here.

21:45
So make sure to be around for that.

21:48
Thank you guys and God bless, thanks for listening to my podcast Swing Trading the Stock Market. I’d like to encourage you to join me in the SharePlanner trading block where I navigate the stock market each day with traders from around the world.

21:58
With your membership you will get a seven day trial and access to my trading room including alerts via text, e-mail and WhatsApp.

22:06
So go ahead, sign up by going to shareplanner.com/trading Block, that’s www.shareplanner.com/trading-block and follow me on SharePlanners, Twitter, Instagram and Facebook where I provide unique market and trading information every day.

22:23
If you have any questions, please feel free to e-mail me at ryan@shareplanner.com. All the best to you and I look forward to trading with you soon.