Okay folks, so today I want to take a break from the negative macro conditions that we've spoken so much about and I need to give you a violent update on play ideas that you need to know about fud or favor. We traders are quite greedy, we just look for volatility and when there is volatility we must exploit. and specifically this lovely evening, I want to bring to your attention Rev, which has been revving up quite a bit over the last week. This is a stock that we started covering last week in Zip Trader U, but it's quite a unique story.

This is a fascinating case study that we need to explain, talk, strategy, and of course, project whether or not it's going to continue. I'll also be discussing other play ideas and catalysts that you're going to want to know about, and trust me, there's another juicy one that has a catalyst right at the end of the month. Also, Quick Plug! I am officially announcing the start of our Fourth of July sale on Ziptraderu. In order to take advantage, all you have to do is click the link below and type in coupon code America50 before checkout and you'll get 50 off the one-time fee for lifetime access to our program.

This is the biggest percentage sale that we've ever done on the program and it will be expiring the night of July 4th, 11, 59 Pm. But if you are going to pay for our program, please promise me that you're going to watch every single lesson. You're going to participate in our private chat. You're going to read each and every single daily morning briefing and use all of our resources.

And of course, take advantage of the lifetime access. If you are somebody who has found value in the videos on this channel, you will find value in Ziptraderu as well, and quite a bit of it, especially at this 50 dip. So anyways, coupon Code America 50. Let's get to work.

Okay, let's go ahead and start with Rev. So Context First, the first time we briefed on Rev was on June 15th, last Wednesday morning June 17th, which was this last Friday, and then of course, this morning. since the original briefing date, it's gone up about 202 from original price to highs, which is a pretty solid run for a period of time, or the market as a whole was pooped out quite a lot. It was pooped out a huge amount, and today alone, it went up 80 plus or so at highs.

So first of all, what's going on? How do we find it? What is the case story here, And what's the point of talking about it now? hindsight, Charlie is there more room left to run? And if so, what's the strategy? Well, here's the context. Revlon in the last 24 hours, has climbed 71 spots in terms of mentions on Reddit. probably more by the time you watch this video. Stock Twits ranks it as the third trending ticker and number one in terms of watchers today.

Major players in the financial media covered it, including the Berg of Bloom, which talked about how Revlon surge drew retail investors in as trading activity boomed and this is a stock that as of today is still only at a market cap of 336 million. which means that it doesn't really take much media coverage to really move this stock. And with all this extra attention, Juicy. Juicy.

Revlon is a business and a stock that has just been completely decimated over the last three years, going from 27 to 108. As of a week or so ago, this was a company that was already having a rough time even before the pandemic was slowing down. sales. A lack of a strong business come back after the pandemic ended.

In fact, 2017 numbers were higher than 2021 numbers. sales last year were actually down 23 compared to where they were in 2017, and last year was one of the best years for the entire industry Now, of course, with a new bust in retail sales and profit margins and consumer demand going down. Combining that with a history of poor management and high debt, While all of these things have finally caught up to the company and the story has gotten a lot more interesting as of the last two weeks because they've declared bankruptcy, Bloomberg has this nice infographic chart piece that explains the trend. First reports come out that Revlon would file for bankruptcy around the 10th and that killed the price even further pushing it down two lows.

And then on the 15th, Revlon actually did file for bankruptcy. That is what caught my eyes because of what we saw with the contrarian trades on different bankruptcy plays like Hertz back in 2020 and with different stocks that people saved from going bankrupt by buying and squeezing out short sellers. Bankruptcy plays are some of the most dangerous in the market, but also some of the biggest runners if you find the right ones in the right setups. Their disclosed Chapter 11 filing said on June 15th, 2022, the company and certain of its subsidiaries, including Revlon Consumer Products Corporation, filed voluntary petitions for reorganization under Chapter 11 of the Us Bankruptcy code.

blah blah blah. Here's the important part: They're declaring this to ensure their ability to continue operating in the ordinary course of business. The debtors have filed with the court motion seeking a variety of first day relief, including authority to obtain financing, pay employee wages and benefits, and pay vendors and suppliers in the ordinary course of all goods and services provided after the petition date. So, aka Revlon took out far too much debt that it couldn't pay, and now it's filing for protection with bankruptcy court in order to what well be able to continue to operate and to be able to at the same time secure more financing.

And then shortly after, there was a report that Reliance Industries, a wealthy Indian company was considering buying Revlon and so prices started jumping again. This was also on the back of Revlon getting the approval of a bankruptcy judge on Friday to tap 375 million dollars of new financing which would help it remain operational. which again, was very, very key, because if it's not going to be operational, this is going to be worth like zero dollars a share. So here's the deal.

Chapter 11 Bankruptcy filings are what you file if you're on the verge of seizing operations because you can't pay your debt obligations and your operational expenses at the same time. Which means essentially that if Chapter 11 isn't granted, well, your company is going to seize operations and most likely die. But best case scenario, if the filing is successful, a judge essentially allows you to reorganize, find more financing, and gives you another chance. But of course, when a company is expected to file for bankruptcy like reports freaked the markets out on back here.

Well, investors are going to assume the worst, because who in their right mind would want to hold the stock of a company that is on the verge of perhaps filing for bankruptcy, who would want to risk holding shares in a company that completely seizes operations? But then if the company gets granted protection and the ability to continue operations and raise more financing, Well, all of a sudden the game completely changes because all of a sudden it goes from being a completely worthless company to then all of a sudden actually having some business and some chance of new life. When things go from the worst case scenario to slightly better than the worst case scenario, stocks can go up quite a bit and that's what happened. And then if the company going bankrupt has a name brand or a real business model behind it, then all of a sudden some of the bigger companies that have money to spend will consider acquiring the smaller companies. which is another reason that people buy up bankrupted stocks.

And that's exactly what happened. People bought up the stock and then you actually had that rumor come out that all of a sudden this company was considering taking it over. The other dynamic here is that of course spectator plays are farther and farther in between. So when a setup actually shows proof of concept week over week, especially all of a sudden, you get into the situation where a lot of money is just focusing on one or two names instead of last year where it was spread out between maybe five 10 15 names.

Those are the dynamics that have benefited Revlon over the last few trading periods and throughout last week. Now Charlie, are you recommending people buy and hold bankruptcy plays? That sounds like a bad idea? No folks, I am not. In fact, you should not have messed with this and should not mess with this in the future unless you are somebody who is specifically targeting these as short term in and out place with extremely tight risk management and an understanding that if you don't have risk management and you're not willing to cut losses quickly, well, this is going to be a terrible, terrible play. We do focus a lot on risk on trades that run fast, and the only thing that I care about is number one: liquidity, the ability to get in and out, number two, a reason for it to go up, number three, risk management on it, and then of course the actual proof of concept that shows that it's starting to move.

I don't care if it's a merger speculation, I don't care if it's an Fda approval, I don't care if it's some sort of bigger company buying a smaller company. I don't care if it's a fake rumor. All I care is that it's making the stock move and it's showing proof of concept. Short-term trades are not about finding something that's safe to buy and hold, because that's not what you would do with a short-term hype trait.

It's about playing the room or selling the news, playing the hype, and not falling for the hype yourself. Even as late as this morning on the briefing, I said, hey, if this doesn't hold 370, it's probably going to be best to avoid it like the damn plague. And I'm not talking covet. I'm talking like the black death with runners.

You have to be able to get in and get out as fast as possible and take profits, especially in this market. So anyways, moving forward. What's the deal here? Well, right now, at least while I was shooting this video, we are in the parabolic running stage with full momentum. The next stage is the retention of value proof of Concept stage, which you get a cool down and it retains value from said cooldown.

Now, if it fails the retention of Value stage, you know what that means. It means All of a sudden, the momentum is gone and you have to restart. And that is a much much tougher process. But if it retains the value all of a sudden, you have a high support level to bounce off of, and then all of a sudden you have a bouncing board, a springboard if you will, to a new all-time high that's quite far above where we had just hit in this cycle.

Combining that with a catalyst of a potential buyout partner could be something that's very, very bullish. That said, at the end of the day, the buyout partner could acquire this for a price that doesn't look nice compared to where Revlon's trading at right now. So you do want to be very, very careful in terms of holding this at any point of time, overnight or in the after hours or pre-market My take is play. The hype runs, sell out when you get validated out.

If you don't know what validation is, make sure to join us in Ziptraderu or watch our completely free video on when to exit a position which is in our trading tutorial playlist. But you want to make sure that you have risk management, because if not, you're going to end up needing Revlon makeup to hide your tears. Another case study that looks similar is Elms, right? This is electric. Last Mile Solutions files for bankruptcy last week gets beat down.

We see that it's showing proof of concept on a similar bounce like Revlon, and we brief on it and it more than doubles Wednesday. Same exact dynamic. a contrarian trade based on bankruptcy strategies. Well, again, we always preach the same thing.

Confirmation and Validation at the very least on a directional basis. which means on the red direction lesson line. Ideally, if you're a scalp trader on the blue price strength Sma line, it all depends on your risk management, the adrenaline junkie in you, and of course your goals. Okay, moving on, Redbox.

So Redbox is a squeeze setup trade idea that we've covered for the last couple of months, both in Ziptraderu and on the channel. I made a video back on April 25th when it was trading at around 392 and we talked about how I hated the company, but I like the squeeze setup setup actually got better as time went on and then all of a sudden you had this merger agreement that created a deadline for the stock to squeeze and that led to things going all the way up to 1820 before it calmed down and retained value at 880 and now is at 11.60 And certainly not all trade ideas work out, especially in this market. but this one did very, very well. and despite pullbacks, it has held still its overall upward direction over our Red directional Sma and so it's worth updating on the setup.

Moving over to Ortex current short interest as a percentage of free float is now at 105 percent. Dropped a bit today, but has had an overall uptrend you go over to cost to borrow, you're at a 826 average. Oh, with a maximum of 1 000, you don't see this very often, folks. Redbox is holding its value so extremely well, despite extreme conviction from short sellers, despite fundamental screaming that this is way way overvalued despite the fact that the acquisition is for far, far less than the current share price and the acquisition is going to go through sometime in the second half of 2022..

to be specific, the deal was that Red Box shareholders are set to receive a fixed exchange rate of 0.087 of a share of chicken soup for the soul class A shares. Which means that Redbox today is valued at about 56 cents per share or in the last couple of weeks based on where chicken soup is trading somewhere around 50 to 70 cents. The fact that the buyout value is somewhere around 50 to 70 cents while this is trading at 11.60 is a massive, massive win, and it's something that you very very rarely see and may never see again. that's more than a 10x spread.

In other cases where you saw short sellers obliterate something, there wasn't something so clearly screaming that this is not worth this price and the reason that that is relevant and why that's bullish actually is simply because short sellers have had such a strong conviction in this, because it makes sense to have one. It's justified that they've left themselves extremely overexposed to these retail buyers and speculators that probably aren't even retail who are basically trying to squeeze them out before the acquisition can even go through, and who know that the acquisition isn't going to go through until the second half of 2022, which doesn't start until the beginning of July, so you still have about eight or nine trading days until that becomes a actual risk. So they're trying to squeeze out Redbox shareholders in the meantime. Very reminiscent of 2021.

And like I said, hey, when this ends, you may not see another one like it ever again. or at least not for quite a long time. But the way that I look at it is it's retaining value. It's on an overall uptrend over our red directional Sma and it has about eight or nine or I think it's seven more trading days until July starts and that's when the acquisition becomes a real threat.

And that's when I wouldn't want to be messing with the stock at all if you're somebody trading it to the upside. So if you're going to get a nice squeeze rally or you're going to play a short-term run in this, you're going to want to look before July starts and the rest of the market knows that as well. So if you're going to get a massive Squeezy Mc Squeezy Rally or even a massive Fomo rally that really gives you some sort of training opportunity, it's going to have to be before that July start If it continues to be quiet over the next week or goes down, watch to see where it retains value, because I would not be surprised if you see a final hurrah that's quite a bit into next week or into the last couple of trading days of the month. I don't want to sound like a broken record though, but eventually it will go down.

I am not a fan of buying holding a stock that you have no fundamental belief in. I am only a fan of doing that with stocks that you do have a fundamental belief in. If you're going to play a short-term hype trade or a bankruptcy trade or a short squeeze play, make sure that you listen to what those words are that I just said. None of those things sound safe, right? They sound like risky trades, so you have to make sure that you're using it with a perspective of oh, I'm really just trying to find something that runs and I'm trying to scalp a profit off it.

or I'm trying to make a temporary play and manage my risk if it goes against me. Okay folks, well that caps off today's video. Make sure to hit that ravishing like button and also subscribe down below. If you are looking to join Ziptrader u, make sure to use coupon code America50 before midnight on July 4th so that you can get your 50 discount.

And if you're looking to get up to 10 free stocks plus a share of Lucid, you can check out the Moomoo Trading app with the link down below as well. Have a good one folks, and I'll see you in the next video.