Trade Alert: Highly speculative BK trade plus markets and TKMR collapses on cue
Wow, I don’t recall the last time I saw a relatively-developed economy’s stock market spike 8% in a single day, but Brazil indeed has. Markets here are volatile. Be careful for the near-term. Use weakness in the stocks you want to own to slowly scale in. But don’t rush it. Bubble-blowing bull market context still applies, but near-term, the volatility in stocks here in the US and around the globe is striking.
Sapphire crystal display and Apple supplier, GT Advanced Technologies files for bankruptcy this morning and the stock is already trading again. Looks like $GTAT shareholders will get pretty much wiped out. Regardless, this was a strange filing and one that seems to have absolutely blindsided existing shareholders.
I’m not surprised by $GTAT‘s collapse. I wrote this 196 days ago here on Scutify: “I don’t doubt that $GTAT will benefit from increased demand from Apple and others for their Sapphire Crystal Displays. But this run from $4 to $19 over the last few months reminds me of another time I was on Kudlow & Company with the CEO of a Titanium company that had just signed a new supply deal to $BA for billions and the stock was up 500% over the last few months into the announcement.”
And I wrote this about, $GTAT on http://tradingwithcody.com/201… “I’d rather sell the news on$GTAT up here. The stock is wildly overextended and it will take a lot of growth to justify the current levels already.” Wish I’d bought puts at some point.
That said, I do sometimes try to sneak in a Bankruptcy Trade as outlined here: http://tradingwithcody.com/201…
The idea behind a BK trade (BK as in Bankruptcy) is that all the traders, hedge fund managers and others who were smartly short the stock are likely to start covering those shorts in the days ahead to lock in their gains and move on. I want to try to sneak in a very high-risk short-term BK trade on GTAT today.
I’m buying a tiny speculative position in GTAT, bidding about 80 cents per share but hoping to scale into more throughout the day closer to 60 or 70 cents per share. It will be a tiny position and I’ll get out of it, win or lose within the next week or so, looking to ride the aforementioned BK-filing phenomenon we have traded mostly successfully over the years I’ve been doing it, including here on TWC over the last few years.
Meanwhile, the Ebola-hyped trade I’d mentioned on Friday is down nearly 20% today. I think it still heads much lower, but it’s not the trade or pitch for me.
