A $1,000 trade on Broadcom

Good afternoon. This is a story of triumph and also of despair.

Let me explain why I tell you not to trade pump and dumps unless you know exactly what you're doing.

Today, we had a classic "Andy Dufresne" consolidation breakout on a pump-and-dump stock. Usually, after the pump, they get dumped. But when they consolidate and break out, you’re just playing the momentum burst. That’s old-school momentum trading in a bull market.

We bought the $19.50 break expecting to get paid to $20. Within the same minute, it was at $21.50. Next thing you know, $22.50. We started selling some, setting stops at breakeven. It ripped to $25, and we were selling.

Here’s the fun part: After we got done, it had another fake-out shakeout, held the level, and ripped from $23 to $38. I didn't catch that second move because I don't like holding these into the open, but some of the people in the room did.

Instead, I moved on to high-quality names with less risk.

Like Nokia. I’d rather buy a stock where I’m risking $50 to make $250...then risk another $50 to make $300... then risk $50 to make $500. All on the same trade because the risks were at the bottom, giving me new opportunities to buy the pullback.

Then there was Broadcom. It fake-outed, shook out, broke VWAP, and we bought at $408.60. The stock got to $412, then $415. On 200 shares, that’s almost a $1,000 trade.

Ciena gave us the exact same setup. Fake out, shake out, back above the level. A 5-point move to VWAP, and if you missed that, it gave you a 17-point move later.

And our friend Rambus? I told people to look for it to pull back to $157.50. It pulled back to exactly $157.50 and rallied 10 points.

It was a lovely day. 

If you prefer to watch, here’s a video of me breaking down today’s trades: 

But before I go, I’m going to say this, and I hope it insults some of you:

If you woke up this morning, saw red on the screen, and thought, "Oh my God, we're in trouble, I need to be shorting something," you are completely clueless about the environment we're in.

Stop what you're doing. Shut your account. Rethink yourself.

Nobody is selling stocks in this market. 

Gap downs are meant to be bought until they're not. I’ll let you know when that day comes, but today wasn't it. The $QQQ rallied 5 points from the VWAP alone.

If you don't understand how to trade this environment, don't touch the pump and dumps. Focus on high-quality earnings reversals around VWAP.

Take my class on June 13th. Join the room. I will explain it to you, and I have no problem being curt because I'm going to tell you the truth and show you how to make money.

If you're already inside the room, I'll see you tomorrow. 

If you're not in here yet, here's the link to join us.

Kenny Glick | Founder, Hit The Bid

P.S. $1,000 on Broadcom. 10 points on Rambus. Multiple wins on Nokia. Stop panicking over red opens and start getting paid. Join the room, and make sure you're signed up for the June 13th class.