Here’s a quick and easy way to make some afternoon money. Check out Fossil (FOSL) (February 14, 2018)FOSL
We are looking at Fossil ( NASDAQ: FOSL ). The company reported earnings and it is up 87, 88 percent so you would think, “Hmm, I guess those earnings are pretty good.” This number here, 65.00, that is the percentage of the float that is short. This is the opposite of the volatility short; this is the Fossil ( NASDAQ: FOSL ) short. And suddenly if you were short this stock expecting a blowup you got “blowed up” instead.
And by the way, just as a general proposition, this is not the chart of a stock that you want to be short. If you shorted it here, for crying out loud cover it down here. But this is NOT a stock that you want to be short. And frankly, if I am offending somebody that’s okay you’re blown-up now anyway. If you shorted this stock you are not the brightest bulb in the chandelier, not by a long shot, not even in a one bulb chandelier. You don’t want to be shorting stuff like this, it has already based and is moving higher.
Look at this, the idea is, “Well okay, I will short it right off the top. When the stock opens up I am going to go ahead and short the stock,” which, by the way, wouldn’t be a bad bet if you could find the shares to short. But check this out: Here is the 5-minute chart, if you were able to short the stock, I actually don’t think there were shares available, I am pretty sure there weren’t. Anyway, let’s say you were able to short the stock, I am actually talking about an afternoon short here, just so you know. So you short the stock and it is up 75 percent. It would seem like a pretty sure bet that you are going to get some kind of retracement. The only time you really wouldn’t is if the reason is it is up so much is because they are getting acquired at a $16.00 a share price. That wasn’t the case here.
Let’s say you were able to short the stock and that was a pretty good short. A pretty good short all the way down to 14.00, right? So then we just take that off of our screens, right? Wrong! We look at this in the middle of the day, I wouldn’t have traded this because I am doing something else during the noon hour. I am out on the West Coast so it is not eating lunch. I am looking at other things, I am not going to trade some goofy stock during lunch time because nobody else is. I don’t know what is going to happen in the afternoon so you are going to miss this trade.
Most of the time it is not going to amount to anything but sometimes it does. If you look at where the stock, a stock that REALLY ramped in the morning; if you look at where it peaked in the morning and you say, “Okay, well I am done with this. I am done with this stock.” I see this, $16.00 is about right. I know it was a little bit higher than there but we are using round numbers here. I see this stock peaked right around $16.00. Then right about here, at 2:00, your alarm starts going off and you look at this and say, “Well okay, so it is back here, 16.00, it is pulling back. I don’t really feel like buying it but it is interesting how even though the stock ran up so much, it didn’t really pullback much. Now it is back here, I see this massive short interest. So we could get kind of a second squeeze here so I better watch this.” Boom! Now you are in.
Now you are looking at this stock and you are seeing it is poking above $16.00, you’re back in. What time is it? It is almost 3:00 so you have got over an hour to go and now the stock is moving up, it is moving nicely for a little afternoon trade. I am not talking about a big move but you can get 7, 8, 9 percent out of a move like this, sometimes more in the afternoon. All this is, is traders trying to cover their shorts, waiting for more of a pullback. And finally it is not happening so you will get traders who covered a little bit in the morning, they are coming back in the afternoon saying, “You know what? I have got to get this thing off the books.” And by the way, on stuff like this, you can also see margin calls as well.
My tactic for this is when you see a stock that makes a big move like this and it drifts lower set an alert for it and you will be surprised, most of the time you won’t hear anything. But every once in a while your trading software is going to kickoff and you are going to look at something and you are going to find a little “afternoon delight” and you don’t even have to leave your desk to get it.