Throughout July and August the $SPY has trended mostly up, encouraging many to speculate that the end of the bear market may be near.


(ZeroPro: 8/22/22)


In terms of hot stocks, Bed Bath & Beyond ($BBBY) is today’s focus. We’ll explore how it truly went beyondexpectations, reaching highs of $30 in mid August, 2022.
Before we dive into the newsletter, you may want to watch veteran trader, Stephen Kalayjian's two keywords for successful trading here.

Bed and Bath went Beyond.



(ZeroPro: 8/22/22)

In August, $BBBY broke out of the $6 level reaching highs of $30 - totaling a 400% increase. Just a few short days after reaching highs, on August 22, it was trading back near the $9s.

How did it start?
(The Street: 8/22/22)

The Washington Post reported that the surge was triggered after a regulatory filing showed activist investor and Chairman of GameStop, Ryan Cohen, was betting big on the big-box retailer. Conversation was said to have ignited across social media and message boards.

How did it end?
The Street reported that Ryan Cohen sold all of his shares on August 16 and 17 generating a 56% profit on his initial investment.


(The Street: 8/22/22)

The best trade for retail short sellers


(ZeroPro: 8/22/22)

On August 17 the stock sold off into the close. The selling is indicated by the yellow square towards the end of the trading day. The following day, both technical and fundamental reasons aligned to short the stock.

Technical analysis: After running from $6 - $30 (400%) the stock closed weak on August 17 before opening red on August 18 for what traders call the: ‘First Red Day’ short pattern.

Fundamental analysis: 
The stock moved due to the catalyst that Ryan Cohen had invested in $BBBY. Once he had sold all of his shares the catalyst is no longer valid.

Watch: My day trade on $BBBY, featured on Hot Shorts,here.

Lessons to conclude:

  • As a short selling day trader you should never underestimate how high a stock can go. Even larger companies with bigger floats, like $BBBY, can run further than you think.

  • When technical analysis matches up with a fundamental catalyst you often get the best trading opportunities.

  • As a short selling day trader you never need to guess the top. Waiting for the first red day can save money and grey hairs.

Thirsty for more knowledge?
Watch: The Long & Short of small caps as Dan Pipitone interviews professional trader and teacher JTrader here.

DISCLAIMER:

This content (“Content”) is produced by Stephen Johnson. The Content represents only the views and opinions of Mr. Johnson. Mr. Johnson’s trading experiences and accomplishments are unique, and your trading results may vary substantially. TradeZero does not endorse the Content and makes no representations or warranties with respect to the accuracy of the Content or information available through any linked third party sites. The Content has been made available for informational and educational purposes only and should not be considered trading or investment advice or a recommendation as to any security. Trading securities can involve high risk and potential loss of funds. Mr. Johnson is compensated by TradeZero for producing the Content and may also receive compensation for customers he introduces to TradeZero.

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Reference
  • TradeZero: Zero Pro: accessed: 8/22/22
  • TradeZero: YouTube: Discover Stephen Kalayjian's two keywords for successful trading Accessed 8/22/22 (https://www.youtube.com/watch?v=I2PghYmKcqE&ab_channel=TradeZero)
  • Washington Post: Accessed 8/22/22 (https://www.washingtonpost.com/business/2022/08/17/bed-bath-and-beyond-stock-price/)
  • The Street: Accessed 8/22/22 (https://www.thestreet.com/memestocks/other-memes/ryan-cohen-made-a-very-profitable-trade-with-bed-bath-beyond-stock)
  • YouTube: Hot Shorts: Accessed 8/22/22 (https://www.youtube.com/watch?v=nmIMXdRpva0&ab_channel=TradeZero)
  • YouTube: Long And Short of Small Caps: Accessed 8/22/22 (https://www.youtube.com/watch?v=qDv8rmp6x6w&ab_channel=TradeZero)