REVEALED: My Secret “Hated Stock” Trading Strategy
Breaking news hits the wires.
A scandal emerges that’s devastating to a company’s business model.
I’m talking Wells Fargo-level here when their fake account scandal was uncovered. Or Chipotle-level when norovirus outbreaks scared customers away for years…
For a period of time, these companies were doomed. And their falling stock prices proved it.
But then — seemingly out of nowhere — a positive announcement.
Miraculously the sky isn’t falling! Turns out millennials still love Chipotle and switching banks is just too inconvenient.
Before you know it… shares shoot back up even higher than before!
Time and time again, this scene plays out on Wall Street. And over the years of trading, I noticed a pattern.
Eventually, these patterns became so reliable that they got me into trading the most hated stocks in America.
Stocks that you probably wouldn’t dare touch.
But there’s a method to my madness…
And there couldn’t be a better time than today for me to show YOU how to start profiting…
Nowhere to Go but Up
Take Chipotle… a classic comeback story.
Shareholders saw their investments wiped out after two back-to-back scandals in 2015 and 2017.
Headlines read, “Will Chipotle Ever Recover?”
Investors were actively rooting against the stock and taking positions to make money when Chipotle shares fell.
This kind of strategy is called shorting. A short sale is a way to profit from a falling stock price.
Essentially, investors borrow shares of stock from their broker. Then they sell the shares on the open market — hoping the share price will have fallen so they can buy them back at a lower price when they have to return them — pocketing the difference.
These short sellers bet BIG on Chipotle’s decline…. eventually pushing the price to a low of $255 from $749 two years prior.
But once shares hit a certain level… the short sellers ran out of steam.
And there was nowhere to go but up!
It didn’t even take much, but once buying picked back up… that momentum was unstoppable.
While investors that stuck with it along the way are sitting on nice gains right about now… investors that caught on to what was happening and bought at the bottom were gifted a 228% return.
But there’s a trick to these trades — not all battered stocks are due for a rebound.
I’m not one to call bottoms, but I can show you when to hop into a hated name to ride its rebound higher.
Before long, you’ll be trading the stocks other investors love to hate…
And making your own fortune just in time for the New Year!
The Gift of Hated Stocks
The end of the year is a time to reflect.
Especially for the stock market.
We round up the best performers… and the worst.
As a fan of hated stocks, the year’s close is one of my favorite times.
Beaten-down companies are practically served to me on a platter.
All I have to do is figure out which ones have a rally on the horizon.
For that, there are three major signs I look for:
Sign #1: Massive selling activity.
Sellers that have constantly shorted the stock and pocketed the difference have depressed prices.
But at a certain point, most of the time those betting the price will continue going down are wrong.
And that’s when a huge move up can start…
Sign #2: No sellers left.
The only way short sellers can close their position is by buying the stock.
That’s right. At some point these traders will eventually start buying the stock themselves.
And when you get enough short sellers buying back shares quickly, that’s when the switch happens…
When no one is willing to sell and the short sellers are squeezed out.
This leads me to sign #3…
Sign #3: A near-term catalyst.
With no one left to sell, the price is NOT going lower.
And at that point… all it takes is a whisper of good news to spark buying momentum.
That’s when I look for anything coming up to trigger a pop.
It could be earnings announcement, sales updates, etc.
And the stock that the Street thought was dead is now roaring back to life!
It really is that easy. Just look for heavily shorted stocks… that aren’t falling any more… with a near-term catalyst on the horizon.
To get you started, I’m going to share the names of a few companies Wall Street has hated this year… but have the potential to gift you BIG gains this holiday season…
In no particular order, TripAdvisor Inc. (TRIP), Chemours Co. (CC) and Nektar Therapeutics (NKTR) have been pummeled by the markets in 2019… and 2020 promises dramatic vertical moves.
But the best part about hated stocks is there is never a shortage!
Go with the most beaten-down stocks on the Street and you’re bound to rake in cash!
Yours for Weekly Profits,
Floor Trader, The Daily Edge