♟ One of The Best Trades I Ever Made (1,130% Winner)

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“When you do follow the price action, sometimes you ‘get lucky.'”

Nate Bear, Lead Technical Tactician, Monument Traders Alliance 

Editor’s Note: We’re less than 1 week away from Nate Bear’s “3-Day Trading Challenge.”

Nate has never done anything like this before.

He’s hosting a competition where you can trade alongside him for three straight days.

And if your skills measure up, you’ll have the chance to win over $50,000 in prizes.

The event is completely free to join.

Click here to sign up today.

– Stephen Prior, Publisher

Nate Bear

Dear Reader,

1,130%.

That was the number that scrolled across my screen after I sold shares on B. Riley Financial (RILY) back in April of 2024.

It was one of my biggest winners ever, turning $65 into $800 in just two days, live in my Daily Profits Live Trading Room.

So what exactly caused the move, and how can you prepare to take advantage of plays like this in the future?

That’s what I’ll be discussing with you today.

The Trade Setup

Before I got positioned on RILY, the market was picking up momentum after some oversold conditions. And I was looking for some stocks that had the potential to squeeze.

One of the main reasons RILY caught my attention is because the stock had a heavy short interest.

At the time I placed the trade, the short interest in RILY was 75%. After a recent monster rally, it has come down to 65%.

Let’s break it down step by step.

Short Interest: In the stock market, when someone believes that a particular stock’s price will decrease, they can engage in what’s called “short selling.” Here’s how it works: 

  • They borrow shares of a stock from someone who owns it (typically through their broker).
  • They sell these borrowed shares on the market at the current price, hoping to buy them back later at a lower price.
  • If the price does indeed drop, they buy back the shares at the lower price and return them to the lender, pocketing the difference as profit.

High Short Interest: This simply refers to a situation where a large number of investors are engaging in short selling for a particular stock. So, a stock with high short interest means that there are many investors betting that its price will go down.

Short Squeeze: Now, imagine the opposite happens – instead of the stock price going down, it starts going up. When this occurs, it puts pressure on short sellers.

Here’s why:

As the stock price rises, short sellers start losing money because they sold shares at a lower price and need to buy them back at a higher price to return them.

Short sellers may start feeling the heat if the stock price rises significantly. They might cut their losses and buy back the shares they borrowed before the price goes even higher.

When many short sellers rush to buy back shares to cover their positions (known as “covering their shorts”), it creates additional demand for the stock, further driving its price up.

This sudden surge in buying activity, especially from short sellers trying to exit their positions, can lead to a rapid increase in the stock’s price, called a short squeeze.

If you don’t know the story, RILY has been under attack by short sellers, alleging the company committed fraud.

The stock declined from its last year’s high of $91.24 down to a low of $14.26 in February.

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Where: The Daily Profits LIVE trading Chatroom

When: December 17th-19th (8:30 A.M.-4 P.M. ET daily)

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So what caused the spike?

The company filed its annual report, it showed minimal adjustments to its financial numbers. More importantly, the company confirmed by a second law firm, there was no wrongdoing.

That news sent the shorts scrambling, pushing it to a high of $35 yesterday.

Below you can see my pre-market plan I posted in the Daily Profits Live Trading Room:

Last Word

It’s hard to trade successfully if you come in with a bias. RILY was attacked by shorts for months. However, I let the price action and the chart dictate whether or not I should take a position.

As retail traders, we don’t have access to the same information as the pros on Wall Street. That’s why it’s critical that we base our decisions on price action.

For example, I had no clue that RILY would be releasing their annual report yesterday, but on a risk vs. reward basis, the trade made sense to me.

When you do follow the price action, sometimes you “get lucky.” I can’t tell you how many times I have bought call options on a strong chart, only to see the next day the company catches an upgrade from a Wall Street firm, sending the stock soaring.Logo

YOUR ACTION PLAN

Trades like RILY are possible for every trader when they know what to look for, and I’m going to show you how to start finding buy opportunities like RILY starting next week.

It’s part of my “3-day Trading Challenge,” where the first place winner of my paper trading contest will win $2,500 in cash.

I’ve never done anything like this before, and I think it’s going to be a lot of fun.

Click here to sign up for FREE today.

FUN FACT FRIDAY

New Highs and Sector Rotations: The S&P 500 and Dow both hit fresh closing records this week, even as the tech-heavy Nasdaq slipped.

The highs came as investors shift money away from tech and into sectors tied to the broader economy, with sectors like financials, materials, industrials and some consumer names are all doing more heavy lifting.

To see how we’re trading this sector cycling, click here to join The War Room.

INSIGHTS YOU MAY HAVE MISSED

From Tariff Hoarding to Chart Collapse: Why Best Buy’s About to Fall 15%

How I’m Trading the “Underappreciated 493”

Ahead of the Fed’s Decision, Here’s What I’m Looking

The End of Mag 7? How to Play It

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Monument Traders Alliance, LLC

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Published by RJ Hamster

I was born on 6 August 1956 in San Francisco, California to Janet and (the late) Richard Hovis. I grew up in Santa Monica, California where I attended elementary, junior high school, and high school (graduating in 1974), in addition to involvement in sports and recreation (Little League +, the Boy’s Club ++). Further, it was in elementary school – St. Augustine’s By-the -Sea Parish School that I found, and made the choice to truly journey with God. I attended Arizona State University from 1974 to 1977 – seeking to become an architect, however, I was not accepted, and, as such, I graduated with a Liberal Arts degree. Upon graduation from Arizona State University, I attended Cal Poly San Luis Obispo and studied City and Regional Planning at the Master’s level. I successfully completed one (1) year in a two (2) year program – I did not complete the Master’s degree in City and Regional Planning – due to personal reasons. I returned to Santa Monica where I started (October 1979) my career as graphic designer with Exxon Company, USA. I spent five years with Exxon Company, USA. While working with Exxon Company, USA I was accepted into architectural school – Sci-Arc in Southern California, however, I did not attend preferring to stay with Exxon.. In 1982 I married Laura Flosi and in April 1983 we had our one and only child – Lauren Alain Hovis – a gift from God. We moved to Phoenix, Arizona in 1984 from Los Angeles, where I went to work as a graphic designer with Kitchell CEM (from 1985 -1987). From 1987 – 1995 I was an independent contractor, and a registered representative in mortgage finance, financial management, graphic design, and drafting. Further, I attended the University of Phoenix and successfully obtained a Master’s in Business Administration (MBA) in 1982. I was also a member of the Scottsdale Jaycees, where I became very involved in community events and projects. In 1994, I accepted a cartography position with the Defense Mapping Agency in Reston, Virginia. As such, I relocated from Phoenix to Reston. In 1998, I was accepted and worked as a Visual Information Officer with the Central Intelligence Agency. In 2002, I worked as a Support Officer until my retirement (due to a need for shoulder surgery) in September 2018. Away from my Federal Government service, I have been involved in various organizations and activities in Northern Virginia. In November of 2011, I married Rebecca Ouellette in Santa Monica, California. I reside in San Tan Valley, AZ with my two hamster - Jess and Timothy, our fish, our lizard - RJ Lizard., and our cats - Pearl and Grey. As to hobbies, I enjoy playing sports, attending sporting events, mentoring individuals from financial management to hamsters, building models, photography, travel, multimedia design, managing partner for RJ Hamster, and jazz – smooth jazz to a samba or a bossa nova. Love and God Bless, Peter – aka RJ Hamster Jo hi

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