All entries by this author

The Risk of Shorting a “Low Float” Stock– $DGLY

Sep 2nd, 2014 | By | Category: SMB Video Blogs, Steven Spencer (Steve's) Blogs
While I was in Nantucket on vacation DGLY popped from $4 to $8. I began to talk to our traders about further upside and the inherent risks associated with shorting a "low float" stock. This video expands a bit on my thought process. Enjoy! Steven Spencer is the co-founder of SMB Capital and SMB University which provides trading education in stocks, options, forex and futures. He has traded professionally for 18 years. His email address is: Steven Spencer is currently long CSCO, DDD, FB, FEYE, LULU, SEAS, VZ and short GLD Read more [...]

Shorting DGLY Can Get FGLY!

Aug 25th, 2014 | By | Category: Steven Spencer (Steve's) Blogs
Here is a short clip from our pre-market meeting on August 25th (filmed at my dining room table in Nantucket;). We take a look at DGLY which was gapping above $9 in the pre-market. I offered some thoughts on how many traders focus on capturing the pull back from $8 to $7 and often miss the larger opportunity to the upside that usually follows. One thing I have noticed recently is that some of these lower priced momentum stocks are having much larger moves on the second gap up higher. We saw this in TKMR a couple of weeks ago as well. The key to today's DGLY trade turned out to be the consolidation above 10 the level mentioned Read more [...]

Trading Lesson–How To Trade When The Market Is “In Play”

Aug 3rd, 2014 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Trading Lesson
Short term traders can greatly increase their risk/reward and win rate by making sure that they are in the most “In Play” names each day. Occasionally, the market itself becomes “In Play” following a major technical break and I will trade it via index ETFs. Friday morning I shared a price on StockTwits  I wanted to get long the market via the SPY. I made this SPY trade and several others on Friday which turned out to be profitable. I received the following email from one of SMB’s student’s asking me to clarify my thought process which I am happy to do. My thoughts are in blue.   Hi Steve, I followed Read more [...]

Trading Lesson: Failed Gaps Can Lead To Large Down Moves– $BRCM

Jul 23rd, 2014 | By | Category: General Comments
In this morning's AM Meeting I discussed a possible short setup in BRCM. I was very skeptical of the gap above $40 as this stock was trading at $30 a couple of months ago and only traded higher when they said they were hiring an investment bank to look at selling off some assets. In my view this was a good setup for "sell the news". It is the opposite of recent trades in SWKS, CMG and BIIB that I have discussed that are "buy the news" situations. As traders we need to evaluate each trade on its merits. If you simply short every gap for no rhyme or reason the market will eliminate you pretty quickly. no relevant positions Read more [...]

Why I Got Long Bed, Bath & Beyond ($BBBY)

Jun 29th, 2014 | By | Category: Steven Spencer (Steve's) Blogs, Trading Lesson
In a raging bull market there aren't a lot of spots to put money to work on the long side that offer good risk to reward. BBBY gapped lower Thursday for the third time this year bringing it within striking distance of important longer term support and around 30% from its high. My thought process was that many large managers would use this opportunity to get long because the perceived downside was considerably less than the upside on the intermediate to longer term time frames. In this video I explain how I used this thesis to establish a swing trade in BBBY on the long side. One of the cool things about being a nimble short term Read more [...]

Trading Education: Do You Have A Methodology To Trade Gaps?

Jun 15th, 2014 | By | Category: General Comments, Steven Spencer (Steve's) Blogs, Trader Development, Trading Lesson, Trading Theory
On June 4th we posted a pre-market video in which I discussed a potential "gap fill" trade in TIBX. When a stock gaps outside of the prior day's range you have three options. Play it for a continuation in the direction of the gap, play it to fill some or all of the gap, or simply take a pass on trading it.  I have found over the years that most traders consistently choose the same option each time disregarding many factors that favor choosing one option over another. Why is this the case? For many it is a lack of methodology for trading gaps. For others it may be they are just more comfortable fading stocks versus following Read more [...]

Shorting The SPY (And Living To Write About It)

Jun 10th, 2014 | By | Category: General Comments, Steven Spencer (Steve's) Blogs
I initiated a pre-market short in the SPY on Thursday June 5th at 193.50. I added to the position as it popped to 194 following the ECB announcement of some monetary stimulus. It was the first time I had shorted the SPY in about six weeks. The risk on the trade was about 40 cents from my average entry and was designed to take advantage of a two to four point pull back. Looking back over the past few months the best short term shorts in the SPY were following strength such as April 4th or May 13th. The trade started to work in the pre-market, and when the market opened the first move was down as well. By 10:00AM the SPY was Read more [...]

PetSmart Not So Smart?

May 21st, 2014 | By | Category: Steven Spencer (Steve's) Blogs, Trading Theory
This morning I created a "trade idea" video featuring a short setup in PETM. Here is how the trade actually played out for me. The idea behind the trade was there was a fresh catalyst causing bearish price action during pre-market trading, and a similar setup has yield excellent results recently in stocks such as DKS and INCY. A very important part of the trading process is trade review which should take place after the market closes and you have some time to review each of the day's trades. The below chart highlights the action points from my trading in PETM on the Open. I lost money on two short trades and one long trade. The Read more [...]

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