Are you trading Nikola ($NKLA) and/or Hertz ($HTZ)? Here’s what I think. (June 12, 2020)
HTZ NKLA MRNA SPY DJ-30 DJ-20 QQQ COMPQX
Let’s talk about a couple of dumb things here. First of all Hertz ( NYSE: HTZ ); you just have to know something here, this is one of the Robin Hood stocks. If you are a long-term investor or you are somebody who thinks that you are really getting a bargain here because it’s Hertz ( NYSE: HTZ ); we have all seen those things at the airport. And so you think you are going to get this stock and then when it runs back up to $10.00 or $20.00, you are going to be a hero. I am just telling you, that’s not the case. This company is absolutely bankrupt, they are not reorganizing, they’re bankrupt. This stock is literally worth nothing; it’s at 2.80 right now, it’s not worth $0.28, it is zero.
Now, I am not telling you not to buy this. What I am telling you is, if you are a day trader this could be your Huckleberry right here. But you just have to know that the types of trades that I typically like, in fact almost exclusively, I like stocks that institutions are buying. Because if I am correct, they are going to give me these nice smooth rides up from the lower left to the upper right side of the chart, this is what I want. If you are doing this you are not trading with institutions, you are trading against other traders.
That’s what you are doing you have to understand that. Never look at the fundamentals of a stock like this. Would I ever make this trade? Yes, 20-years ago when I didn’t know any better I would be all over this. I can’t tell you whether I would have made or lost money but this shiny object is something that definitely would get my attention; now, not a chance; because I know it’s a worthless stock and I have better things to do.
But if you are trading this stock this would be the one thing, make sure you understand what the VWAP is, volume weighted average price. If you know what the VWAP is then you have a rule, never be buying the stock if it is below the VWAP. Always own it when it is above the VWAP. If it gets super, super-extended then go ahead and take that ride. But typically your rule is, if it is above the VWAP that’s when I am buying. If it starts to drop below the VWAP absolutely do not go near it.
Now, Nikola ( NASDAQ: NKLA ); this is a stock, if you clicked on this video it is probably because of this stock. This is the one that is really in the news; this is what you have to understand, the big money was made back here. This was the big money this was the easy money. We actually were doing a live trading session here on this day. This wasn’t my pick but it was one that several of our members were pushing in that session and a lot of people made a ton of money. What you need to understand is, now this is a harder penny environment here. You are basically risking $5.00 bills to make dimes. So I would stay away from this for a while. Let it rest and just focus on kind of the next big thing as opposed to the last big thing.
This was the big one, Moderna ( NASDAQ: MRNA ), they are going to make the vaccine for the COVID thing and we are all going to be rich owning the stock. Nobody is going to get the flu; we’re all going to lose weight and look good. That didn’t happen and you got all this rampant insider selling. There is a lot of scummy stuff going on there; literally, they are the worst of Wall Street.
If you got sucked into this you are still holding it. And I know some of you still are because every once in a while I will see somebody say, “Hey Dan, do you think Moderna ( NASDAQ: MRNA ) is going up?” And I am thinking there is somebody that is trapped. Just learn the lesson, when a stock runs up really big like this and then it starts to flip over, you have to know that the fast money is getting out.
One other thing with respect to that; I want you to look at the market, SPY ( NYSEARCA: SPY ), and this is kind of a little bonus feature I guess. I want you to look at the market in a weekly time frame. This is a bearish engulfing pattern and it is as bad as it sounds. This, DJ-30 ( INDEXDJX: .DJI ), is a bearish engulfing pattern. This, DJ-20 ( INDEXDJX: DJT ), is a bearish engulfing pattern. The QQQs ( NASDAQ: QQQ ), it is not quite a bearish engulfing pattern but it doesn’t look good. And then similarly here, ( COMPQX ), the same type of thing.
What I am telling you is, this is a big, big reversal pattern signal. You do not want to be farting around in this market when the indexes look like this. You have got to pick your stocks very carefully and they should be few and far between because there is just not a lot to do right now.
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