Hey everyone, Ross Cameron here! If you caught last week’s episode, I broke down the wild Chinese pump-and-dump move that drove CHSN from $5 to $44 a share in a day before crashing right back down. I called it out, regulators stepped in, and boom, that stock’s now suspended while they check it all out. So, what’s the update today? Well, we’ve got another wild one. And let me tell you—the market never fails to surprise. I’ve been in this game a long time but today was one of those days where even I had to step back and question if what I was seeing was real.

It’s all about this stock that took off pre-market. As a momentum trader, that alone gets me excited, but with every stock that shoots up, the first question I ask is, “What’s the news?” Right? We all look for something to justify the spike, a catalyst to explain why people are flocking to it. I found nothing. And that’s a red flag. Fine, maybe it’s a technical breakout? Yeah, but when I checked the short interest, it was only 1.6%. Definitely no short squeeze, so what on earth is pushing this thing?

Scanning

I fire up my scanners, and boom, this stock is blowing up all over—top gainer, hitting the high-of-day scanner, running-up scanner—you name it, it’s everywhere. At that point, the stock was up almost 170%. The company? Some firm out of China that sells wine and caviar. Sure, that’s cool, but realistically, how is a $2 million-a-year business suddenly worth $250 million? Especially since it closed the previous day around $2 a share.

But that’s what keeps things interesting in day trading. Even when the fundamentals scream, “This isn’t right!”, the technicals tell you a different story. I had to treat this like any other breakout. There was a huge spike happening, no news backing it up, and we had volatility coming in hot.

Watching the Action Unfold

One key moment came when the stock hit $3, and all of a sudden I see a 40,000-share bid pop up at that price. Why would someone slap down a 40,000-share order with no clear reason for the price surge? Maybe it’s real support, maybe just a spoof. Spoof orders are a risky game—show big support to trick others into buying in, but when the price starts to drop, that big bid disappears. But still, even with the sketchy vibes, that’s enough to get anyone’s attention.

I thought about buying on the pullback but didn’t. My experience told me to be cautious here. Sure enough, the price shot up again but then tanked just as fast, making me grateful I trusted my gut. Trading is all about those split-second decisions that can make or break your day.

News Hits and Stock Explodes

Everything changed when some news finally dropped at 9 a.m.—and not the good kind. The company announced a public offering priced at 40 cents a share. Imagine that—it was trading at $3 earlier and now they’re offering shares at a massive discount. Typically, when a company does something like this, the stock price craters. Why? Because stock offerings dilute the market, meaning more shares for the public. It’s like increasing the supply of bananas at the store; prices tend to drop when there’s too much inventory.

But did the stock tank? No, it had the craziest move I’ve ever seen—it dipped to $2.70, only to rip back up to $5.18 in under a minute! I’ve seen moves before, but a 100% surge in just 40 seconds blew my mind. Shorts were getting burned left and right. And as traders, we have to ask: why the sudden spike? Who’s driving this?

What the Offering Means

So, why didn’t the stock drop to 40 cents like the offering price suggested it should? Historically, when a company does a secondary offering, the share price drifts down to meet that new lower price. Here though, no one knows who scooped up those 27 million shares in the offering. But if that investor wanted to sell right now, they’d be up over $100 million—just like that!

As a trader, I have to wonder if this stock’s being manipulated behind the scenes. With Chinese stocks, we’ve seen this kind of behavior before. There’s plenty of room for chaos when you mix a volatile stock with speculative trading. But here’s the thing—at some point, those 27 million shares will likely hit the market, and when they do, the stock will tank. It’s only a matter of time.

Know When to Walk Away

That’s why today, even though I could’ve chased more gains, I stopped after locking in a solid $5k during pre-market. It’s Friday, and I stick to my daily profit goals; discipline is key. I knew something was off with this stock, and I wasn’t willing to take unnecessary risks. I’ve learned the hard way that sometimes the best trade is no trade at all.

Right now, as I’m writing this, the stock is up 200%+ on the day. We’ll probably see these gains reverse, and the price will fall back in line, reflecting the company’s true value. But until then, there’s only one rule to follow: the market can stay irrational longer than you can stay solvent. If you’re trying to short this thing, you’d better be ready for some pain before it inevitably heads back down.

Final Thoughts

The world of day trading is full of surprises. Today’s stock move was insane, and I’m not sure we’re done with it yet. But this just goes to show that you need to stay sharp. Always trade the chart, don’t get swayed by what seems logical, and stick to your strategy. It’s easy to get caught up in the madness but being disciplined is what keeps successful traders in the game for the long haul. Thanks for watching, and happy trading!

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Warrior Trading was founded by Ross Cameron in 2012. Today Warrior Trading is a thriving community of thousands of day traders learning to trade under the curriculum designed by Ross

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Disclaimer: The results shared are based on my personal trading experiences and are not typical. Trading involves significant risk, and past performance is not indicative of future results. Always practice in a simulator before trading with real money.