A $CAR crash in the making
- Miguel Ferreir (WizDayTrader)
- Apr 27
- 3 min read
How we used AI to prevent a 76% drawdown in $CAR?
Happy Monday! What's the point of AI if you don't know how to use it?! In this post we break down how we used AI to prevent from entering a catastrophic loss on $CAR.
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We've all been there, suddenly everyone is rushing into the newest hot stock ready to rumble and make a quick buck. You may not remember how you first heard about it: social media, from a friend, CNBC news, etc. All you know is you have to get in and make some money like everyone else is! This is what happened to us recently on the stock $CAR.
It seemed like everyone was making money on $CAR or reporting about it on social media. The hype was real and we wanted in!
So, what's the back story of $CAR?
Well, it was a short squeeze setup in the making, but one that didn't make sense. Unlike $GME this wasn't a retail driven squeeze. Two hedge funds, SRS Investment and Pentwater Capital, controlled 71% of the shares but when including their cash-settled equity swaps, their combined holdings exceeded the entire outstanding supply. A company that reported a $995 million net loss last year and was struggling under a massive debt load for months was being repriced like it was going to the moon! The supply mismatch was so extreme that short sellers were trapped in a mathematical impossibility sending the trajectory of the shares skyrocketing due to zero shares being left to borrow and the float effectively nonexistent.
So now that we knew what was going on, how do we take advantage of this short squeeze if at all?
In comes our trusty sidekick, OpenClaw, an agent that we can harness to tell us the 411 on stocks and sum up what's going on. Think of it like a tool that we can use to enter and exit positions in the market more effectively. And that's just what we did!
We ran a report prompting OpenClaw on April 21st to tell us what the strategy was for entering $CAR and the answer might surprise you.
Instead of it screaming dollar dollar bills y'all it offered a more sobering strategy with a Verdict of DO NOT ENTER. Now where's the fun in that when we are taught to rush into short squeeze's and ride them out until the powder is dry form the keg bursting. Well, we offered this assessment on our twitter account on April 21st and that was the exact moment the stock bottomed that day, later we noted the stock was up 20% from our post and for a day trade this would have been a good spot to take profits. So, did we outsmart the AI?
At first, it might seem so that day that we were able to take this quick trade and assessment from OpenClaw and turn into a winning trade. If you look closely though all the Key Risks OpenClaw notes and treating it as investment were spot on. You can see from the chart below the arrow indicated the day we saw the trade and the next day marked the top.
$CAR is down nearly 76% from its highs now with the bag holders underwater now.
Summary: OpenClaw was right and unless I was extremely disciplined to trade in and out of the position that same day, I could have been in a position where I'm at a loss on a position that I took at near the highs which is extremely painful both emotionally and taxing on my mental capital. I'm glad I didn't take the trade and applaud OpenClaw for doing the work and us for being disciplined to know when not to get involved.
That's it for now, if you've enjoyed this post please be sure to share our service with friends or even if you have recommendations let us know! Happy Monday and don't forget to trade confidently!
Essex Trading Quote of the Day (#EsxQotD)
"The future of AI is not about replacing humans, it’s about augmenting human capabilities."
~ Sundar Pichai, CEO of Google
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