You’re probably here because you’ve read our first article about features on the moomoo app that give you an edge as a trader. If not, do yourself a favour and read it here. After that, imagine us saying, “You’re welcome,” then come back here and do the same thing.
In case you guys haven’t heard of us, we are Trading Analyst Playbook (affectionately known as TAP), a vibrant and authentic trading community with investors of all levels helping one another reap maximum profits with minimum work.
This post was originally posted here. The writers, Trading Analyst Playbook, are veteran community members and bloggers on InvestingNote, with a username known as @TradingAnalystPlaybook and has close to 2,000 followers.
So back to why you’re here: you want to have the edge as a trader. You’ll need the proper tools, and today we are writing about some of the keys that will unlock the doors of economic mystery and give you access to unique insights that may otherwise be very, very hard to obtain. Let’s begin…
Stock Screener (Part 2)
“The Stock Screener again?” you may think. Yes, but that’s because there’s more to this feature than we can talk about in just one article. Here, we’re gonna share with you some concepts you’ll need to understand to learn how to maximise this feature: ‘short interest’ and ‘short squeeze’.
On moomoo’s website explains ‘short interest’ this way: ‘Short interest is the total number of shares of a particular stock that have been sold short by investors but have not yet been covered or closed out. This can be expressed as a number or as a percentage. When expressed as a percentage, short interest is the number of shorted shares divided by the number of shares outstanding. For example, a stock with 1.5 million shares sold short and 10 million shares outstanding has a short interest of 15% (1.5 million / 10 million = 15%).’
Short interest can provide insight into the potential direction of an individual stock, and how bullish or bearish investors are about the market overall. Stock exchanges measure and issue reports on it at the end of each month, giving investors a tool to use as a short-selling benchmark. For example, the Nasdaq exchange publishes a short interest report at the middle and end of each month.
Now let’s talk about a ‘short squeeze’ – and no it has nothing to do with briefly using your stress ball (you can put that away, you won’t need it). Suppose there is a high degree of short-sellers holding positions in a particular security. The short squeeze begins when the price unexpectedly jumps higher. With this sudden jump in the stock price, short sellers must cut their losses and cover or exit their short positions.
Why is all this important? Well, we used the moomoo app as a critical tool for a profitable trade to take advantage of situations like the above. Here’s how it went:
How TAP Profited from these
Special Purpose Acquisition Companies (SPACs) are also known as blank checks, since investors initially put their money in without knowing what business the company would buy. We had a huge SPAC-boom in the late 2020s into early February ‘21. However, as 2021 progressed and the Fed signaled their intention to cut asset purchases, the SPAC craze started to die off. All kinds of big names had been launching SPACs, from billionaire Bill Ackman to celebrities like former New York Yankee Alex Rodriguez.
Short sellers and activist investors who hunt for companies that they think are weak started coming out publicly in early-February, placing bets on multiple SPACs, thinking that the price would fall over a certain period. Some of these names included Genius Sports and DraftKings. As of July 16, total short interest in active SPAC securities hit $2.36 billion, up more than threefold from the start of the year, according to data compiled by S3 Partners.
Grab Inc., a company that you’re probably familiar with, decided to go public through a SPAC (Altimeter Growth Corp – $AGC). Unlike other SPACs that had been over-promising and under-delivering, we knew for a fact that Grab has been doing pretty well. I mean, hardly a week goes by without us using the Grab app to comfortably chauffeur us around the country, or satisfy our rumbling bellies.
After some research, we discovered that Altimeter Growth Corp, led by Brad Gerstner, had made some really good bets on growth names in the past, including Uber, Snowflake, Roblox and others. We’re not saying that you should play ‘monkey see, monkey do’ with Brad, but what we are saying is that he has a pretty impressive track record!
While scrolling through the short interest list, we also noticed that $AGC had a short interest of 31.04%, which was among the Top 10 most shorted stocks in the world. We don’t know what you think, but we think that was crazy!
Using simple technical analysis, we whipped out our ever-reliable descending trendline using the moomoo app and plotted it on the screen. Lo and behold, it looked like $AGC was likely to breakout from the descending trendline and could make a move towards the upside.
Within the next couple of days, the short-sellers had to cover their position as the stock exploded upwards. We also noted that social media accounts on Twitter began to cover this name, which probably attracted retail attention and participation like hungry fruit flies to a sweet banana. Yum…
Now on to short squeezes. Let’s paint this scenario and share with you our process in earning from it:
Market: US (We only trade US Market equities)
Market Value: Above 1 Billion (We don’t trade penny stocks due to increased risk)
Volume: Above 2 (We want to see a larger than usual volume run rate)
1D Volume: Above 500k (A stock with increased liquidity would reduce chances of a sudden downswing)
New High: Above the 100 Day High (This strategy works best when price is above the 100 day high as price would enter into “exploration” mode)
Remember that we as small fishes would like to follow the direction of the big boys: the institutional investors and insiders. Volume is usually a footprint that they leave behind. Of course, we don’t particularly enjoy the idea of being the tiny fish trailing the shark that’s enjoying its meal, but if it’s gonna get us the profits we want, we’re game!
Sure enough – profits we were after, and profits we received with open arms. Here’s an example of Blink Charging Inc. ($BLNK), which had an extraordinarily high short-interest break out of a descending trendline last week:
‘moo live’: Earnings Conference Call
Ah… Do you smell that? The scent of earnings season fills the air. Don’t you just love it? No? Well, this feature will make you like it a little more.
That’s because the moomoo app has a feature called ‘moo live’ that allows their users to view the earnings conference calls live. Not enough? Well, you can also join in vibrant discussions with other investors attending the call with the app.
We recently attended the Earnings Conference Call for $NIO, an interesting EV company based in China. Not only was it an enjoyable time of interacting with other investors, it was wonderful to learn new perspectives, pick their brains, and talk about what we plan to do when we finally arrive on the moon.
Conclusion + Delicious Promos
Now you know why TAP chooses to use the moomoo app? Need we say even more? Probably not. If you want to gain an edge in the market, it’s these little details we wrote about that matter. In fact, you might get an edge sharper than Gordon Ramsey’s santoku knife.
Also, come and look for us within the moo community – TAP Invest! If you are still not part of their 16-million strong moo community, you can overcome your FOMO right now and check out their Welcome Bundle!
Register for a moomoo ID Reward:
- 180 days unlimited commission-free trading for the US, HK & SG stock market
Account Opening Reward:
- Free access to Lvl 2 Market Data for the US stock market
- Free access to Lvl 1 Market Data for the SG stock market
- Free access to Lvl 1 Market Data for China A Shares market
- 1 limited edition “moomoo Oppa” moomoo figurine merchandise
First Deposit Reward:
New users will need to deposit of SGD 2,700 or USD 2,000 or HKD 16,000 & above to receive the following,
- 1 Apple (AAPL) share worth around SGD 200
- SGD 40 Stock Cash Coupon Bundle
Seasoned Traders who are looking at consolidating your portfolio into one account will be pleased to know there’s a Shares Transfer-in Reward:
Accumulated Share Value successfully transferred-In (SGD) within Campaign Period,
- SGD 50,000 – SGD 99,999: rewarded 1 Apple (AAPL) share
- SGD 100,000 – SGD 199,999: rewarded 2 Apple (AAPL) shares
- ≥ SGD 200,000: rewarded 1 iPhone 13 (256GB) worth around SGD 1,469 and this is limited to 50 sets, first come first serve! Or 3 Free Apple (AAPL) shares.
Wait no more and sign up today! Happy Trading!
All images in this article are for illustration only.
This article was written by Trading Analyst Playbook (TAP) in collaboration with FUTU SG.
Once again, this article is a guest post and was originally posted on TradingAnalystPlaybook‘s profile on InvestingNote.
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