Crying tears over DryShips (DRYS)? Here’s your tissue. (November 22, 2016)
DRYS DSX DRYS
I want to look at DryShips ( NASDAQ:DRYS ) here. This is down another 30 percent today and it will probably be down another 30 percent tomorrow. Here is the thing: I have been saying, and I am not the only one, this is not an original thought, that you really ought to stay out of these. The reason I am mentioning this now is because I know how it is to be a new trader. There are always new traders coming into the market, that is just the way it is. And if you are a new trader you are going to be more attracted to this kind of thing. I mean who wouldn’t be attracted to a stock that goes from $5.00 up to $12.00 in a day? But here is the problem: You get on the wrong side of this thing and there is a reason why you clicked on this video when you see that it is about DryShips ( NASDAQ:DRYS ). Hopefully it was because you were going, “I wonder what Dan has to say about this.” As opposed to, “Oh my gosh! I am upside down in this stupid thing. I bought a bunch at $50.00 and now I am hoping that Dan tells me that it is going to be okay.” Well, I am not. You are not going to be okay.
Here is the thing: All this stuff went up because it is just some stupid thing, frankly, because the Baltic Dry Shipping Index has been going up a little bit and suddenly everybody thinks because we got a new president that we are all going to get skinnier, younger looking, better looking. We are all going to be rich and very, very popular. And by the way it is going to cost a lot more to ship raw materials overseas; so therefore DryShips ( NASDAQ:DRYS ) was $5.00, it needs to be $100.00. This is a chart of stupidity, basically. But I want to make you smart here. Lets look at the 15-minute chart, the intraday charts here. This is what I want to show you, how hope springs eternal at the beginning of the day. Here, you see on the 17th the stock closes down and then what happens? The morning of the 18th it jumps up.
Now lets look at 18th here, we are going to go back to the daily chart. Here is the 18th, you get this big massive sell-off, then what happens? The first thing in the morning you get retail guys coming in. You will even get professional traders saying, “Hey, I want to juice this stock a little bit. Lets see if we can suck some people in here, and then short some more, sell some more, guys that are buying up here.” So they push it up, they push the demand up first thing in the morning. You can see it here, first thing in the morning here. This was a BIG move first thing in the morning. Then the next day, here we get a close at 11.81, we will call it 12.00. Then what happens the very next day? It opens up at 13.50 and trails down. And even down here. Closes right here. 9.10. Opens up the next day, “Oh my gosh! This is it. I am in, I am in for the second wave. Now is the time to get it.”
Here is the point, when these stocks move down like this, and this is not the only one, when these stocks move down like this they are really under a lot of selling pressure, you are going to see a lot of gaps first thing in the morning. What I am telling you is, you want to be selling into those. Or at the very least don’t be BUYING into them. Those are kind of ‘suckers’ gaps, to tell you the truth. I have taught a course, I actually taught it twice. It was so popular I have two versions of it. It is called The 59-Minute Trader, where you are learning to trade the first hour of the day. One of the things that I talk about is how important it is to look at where the opening print is. Where is the stock trading? And then is it still above that opening print or below the opening print, whichever way you are going? Where is it 10-15-minutes, even 5-minutes after the opening bell? You have to look and see not where a stock opens up, but where a stock trades AFTER it has opened up.
What that will do, if you can just follow that kind of stuff, it will keep you out of so many bad trades and it will get you INTO so many good trades. The only downside is if you are an Irish Catholic like me and then you fell guilty about making so much money. That is what charities and churches are for, you can give that stuff away. But in all seriousness, the point is, if you can understand how these gaps in the mornings work you will learn a lot about keeping your money. And here on DryShips ( NASDAQ:DRYS ), on all of these things, these morning gaps will kill you. They will absolutely kill you. If this stock gaps up tomorrow you need to sell into it. Trust me, it is not going back to $8.00. Not unless they do a reverse split. It will hit 5.00 or 4.00 before it hits 8.00. And if it does hit 8.00 find any shares that you can short and short it. It shouldn’t have been $100.00. It shouldn’t have been $8.00. It should actually be $5.00.
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