After the Pump, It Dumps
Hey VWAPians,
I hate stocks.
But that’s no secret, I say it all the time.
But not everyone has been following me for a minute, so my humor and cynicism may get lost in translation.
For that reason, let me explain for the newbs in here…
I hate the industry – the analysts, market makers, manipulation etc.
The game is essentially rigged.
There are some very big, very powerful players out there (our own government for one), and if you think they aren’t in control then you are very naive.
Does that mean it’s pointless to be involved?
Absolutely not… All I’m saying is you need to have the right tools and knowledge if you really want to have a shot at this.
So while I love to push people’s buttons by talking about my hatred for the stock market and analysts etc…
I absolutely love trading. It’s the greatest job on earth.
I’ve been trading since the day I was born, ya dig?
Alright, now that we have that settled, let’s get back to “hating” stocks…
All I have to say is ORPH… always remember the ORPH.
$77.77 and back to worthless in a day
This worthless piece of trash went from $5 to a $77 high in a day, but closed that day back in the 20s.
And where is it now?
$5… surprise, surprise.
Need I say more?
When stocks are being pumped, they are all over the news… only to be replaced by another the next week.
Let’s forget about the pump for a second…
Today I’m going to talk about what comes after “the pump.”
And show you why the most important thing we can do is stay on the right side of VWAP.
If you are new here, and haven’t caught one of my LIVE trading sessions, you’re in luck…
Don’t miss me & VWAP in action… LIVE in the Money Morning LIVE room at 9:30 a.m. ET right here.
To prepare, you can view my rolling watchlist here, as well as my daily Warlock Watchlist at the top of ThisIsVWAP.com.
HERE COMES THE DUMP
I hate all the trash stocks that get pumped and ultimately dumped on some poor oblivious fools.
It’s really sad when you think about it…
But that said, one person’s disaster is our opportunity.
And I’m not going to get cleaned out just because I feel bad for the people that don’t know better.
The craziest part is this is an everyday thing.
There is always some worthless stock being pumped up on some fake news story.
These “insane names” as I like to call them include recently pumped stocks like MRIN, CRVS, BBIG, NURO, DATS, and CEI.
Just pull up any of those charts and see for yourself.
After the pump… comes the dump.
Today I’m going to specifically highlight Camber Energy (CEI) because of the move we saw over the last 3 days.
Take a look at this chart:
Chart: courtesy of thinkorswim
And last week it was $4.85 at the high, well over a 1000% move up in just a month.
If you didn’t already know – That’s a pump.
I’m sure they were putting out reports of growth in the business or an acquisition of another worthless company or some other fake news… and there was probably some Reddit group helping push the narrative.
There’s an endless supply of fake stories used when pumping these stocks, so just take your pick.
But in the end, that’s all they are… Stories.
And once the buying calms down and inevitably it will, the stock price plummets back to reality.
So how do we stay safe in this environment?
First off, don’t invest in these “insane names.”
Do not believe the hype and do not fall in love with garbage stocks.
Second, stay on the right side of VWAP.
Going back to CEI, take a look at the 1-minute intraday chart from 2 days ago.
Chart: courtesy of thinkorswim
IF you were long CEI on the morning move above VWAP, you should be out now.
Proper trade management would have you selling into the move to lock in profits.
And once a stock crosses back below VWAP, the trade is over.
After the cross, CEI then retested VWAP but failed to get back above (first white arrow). Now it’s getting interesting on the short side.
The next move down broke the low of the day, after which CEI again moved up towards VWAP.
This time it wasn’t able to even touch the line as weakness is settling in (second white arrow).
CEI began its move down…
Minutes later, news of a short report on CEI came out and the stock tanked… going from just under $3 to $1.
Chart: courtesy of thinkorswim
If you were long in the morning but didn’t get out when it broke below VWAP, you aren’t following the rules.
The rules keep us safe.
Moral of the story – Always be on the right side of VWAP.
The right side of VWAP, the right side of the trade… and the right side of life.
Now let’s get to it…
Join me LIVE at 9:30 a.m. ET for another great day of trading.
It’s going to be a fun one as always…
Check out my rolling watchlist here, as well as my daily Warlock Watchlist at the top of ThisIsVWAP.com.
Kenny “The Warlock” Glick
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October 07 2021
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