Thread by @TradetheMatrix1

To address ydays question, which pops up often: "Why is X ticker fading if it was trading high float rotation volumes, it should be going higher?".

Thread:
#smallcaps #trading

High float rotation volumes as high chance of short squeeze is often overused term, because it is all based on assumption that mechanics work only in one sided direction. Which is incorrect. Market makers can also float rotate somewhat ticker that they are distributing (trap).

Its often very difficult to tell just based from volume and float if ticker is under accumulation or distribution process. So the assumption of low float+high volume=squeeze can also turn very noisy in performance (very much 50-50 guessing).

You need to include recent theme and cycle into the thesis, to increase the probabilities. For example if momentum conditions over past 3 days are really strong, then high volume and float rotation can deliver, but without it, it has actually more chances to fail.

Which tells you that float rotation if not used in right context, is just one of those things to get obsessed with, which doesnt really pack a punch, noisy.
You have to also know when to ignore that variable, which was the case for both HSDT and JAN from personal side.

Also keep in mind, over past 2 years volumes increased by huge factor. So many tickers float rotate vs 2017s for example where it was more rare. Do many more tickers end being squeezers therefore lately too vs 2017 (by factor of 10X)? No.
That should validate the points above.