A Shining Example Of Why Short Selling Pumped Up Penny Stocks Rocks!
Posted by timothysykes on Wed 6th of Feb, 2008 11:52:16 AM
Tags:
TIM $14,933, Up $1,583, Thank You IDMI, Thank You PennyStocking
Short Selling 40% of my TIM assets into the face of pure insanity, aka (IDMI) up 234% on 3 month old news and a PR that failed to get much interest when it was released the day before, might seem a little crazy to some. But then again they haven’t traded THIS EXACT SAME PATTERN HUNDREDS OF TIMES LIKE I HAVE.
Over the past decade, even though the plays, the players, the message boards, the news, the industries, the % of assets I’ve used, the extent of my poor timing on my entries and exits, the patterns and the % profits have remained more or less the same. And that’s why I think I can teach this game to anybody.
TIM Lesson: It’s not about BS random picks, it’s about pattern recognition and understanding of the variables to adapt to the patterns mutations (Don’t worry haters, I won’t bring up my DVD) (oops!)
You see, as usual, I made plenty of mistakes—missing the buying opportunity on the breakout at $2, shorting too early (at $3.15), averaging up (at $3.75 to get my total average cost to $3.36), not adding to my position this morning pre-market when proven correct (Thinkorswim had plenty of shares available to short in the $3.30 range—in hindsight I should’ve added, but who knew if it would spike at the open) and covering too early (at an average of $2.90ish—right now at $2.70—and will probably go lower over the next few days) and for all my mistakes, I came away with a 40+ cent/share profit, $650ish, 12% in overnight, one of TIM’s largest to date.
Is this just the latest example of how lucky I am? Am I Fooled By Randomness? Possibly. Quite possibly. But somehow I don’t believe that it’s “random” for a stock that surged—basically due to penny stock momentum and a short squeeze—to be one of the biggest losers in the stock market the next day. Sure, sure they got that Nasdaq delisting notice, blah blah, but that really only applies to stocks under $1 so that’s not a big concern here and I doubt it influenced things much. So just take a look at these pumped up penny stock charts and see all these similar patterns. I’m not a “stock picking genius”, I didn’t “discover” these patterns (I didn’t land on Plymouth Rock, Plymouth Rock landed on me!) and there’s plenty of other people who play these at TheLion and GreenOnTheScreen, (but I’m gonna help them go mainstream (and for that, I’m taking my cut!)), You’ll notice some of these patterns aren’t similar and if you’ve read my book, you know it’s these “imperfect patterns” that have always done me in.
So I’m gonna keep playing and talking/writing up a storm about patterns like (IDMI)—ideally, focusing purely on them because they off the best risk-reward trades in the ENTIRE stock market. Sure, they’re scary, so it’s just gonna take practice and knowledge to get you guys comfortable playing them. Maybe I’ll get better at buying the initial breakouts, waiting long enough, and shorting the breakdowns, but I wouldn’t count on it. I’ve simply got too many other things to do right now, namely, writing, blogging, vlogging, podcasting and cutting through all the BS in finance. It’s a full-time job. Trading these patterns will always be up there, but remember, they’re not very scalable (no way to short more 1 million shares of IDMI, so $3mil is the max on this one, so apologies to the rich bastards out there who are only interested in scalable strategies, this isn’t for you), aka ideal for individual investors and traders.
So take a look at this annotated chart and learn. Depending on price action, I might re-short (IDMI), c’mon bounce you POS!
UPDATE: Couldn’t help myself, re-shorted 800 shares of IDMI on the bounce at $3.18, covered within 10 minutes at $2.95, easy, easy $150ish. Newbies: I don’t advise shorting late morning spikes, they can go further than you expect and sometimes even turn a stock completely around (rare)…this is a true POS company though, so I would have no problem adding on the way up–that’s right Livermore zealots, I average up!
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TIM Trades
View All| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| July 2 | KIRK | $10.60 | $11.53 | $1377 |
| June 30 | ISRL | $107.97 | $118 | $985 |
| June 24 | LZB | $4.53 | $4.81 | $1240 |
| June 17 | GWSC | $1.86 | $2.76 | $2679 |
| June 15 | SHZ | $1.66 | $1.83 | $280 |
| June 15 | SPNG | $0.11 | $0.18 | $630 |
| June 12 | JAZZ | $2.84 | $3.26 | $380 |
| June 12 | MAPP | $9.68 | $10.07 | $565 |
| June 8 | HEB | $3.00 | $4.18 | $334 |
| June 3 | GROW | $8.64 | $8.96 | $740 |
| June 3 | SYMX | $1.21 | $1.11 | $940 |
| June 1 | USCN | $0.55 | $0.86 | $260 |
Total: $65,674 (421%)
Hey Tim, so good to have you at the Lion. I’m in the process of buying your book and DVD. Looking forward to hearing more from you.
Damn nice gain. Don’t lose it this time lol
Dan, I won’t just gotta focus on these big winners, I screwed this one up completely 50 cents off the high, 50 cents off the low and i still made nearly 50 cents/share! I need that volatility to give me plenty of room for error
NYNY up 160% over past 7 trading days, up 50% today alone. Price now at $2.20, gap close at $3.08. Exhibiting roll over tendencies. It’s a hospitality and resort stock focusing on gaming. There has been no news for over 1 week. Establishing 1/4 position here.
MFLX long play getting abump here.
whaaat NYNY has broken out, is filling the gap and has takeover rumors galor. i’d avoid it but if anything i’d be long biased. guess we see things differently!
Impressive!
Nice trade, Tim! :) Did you see the action in Whirlpool (WHR) today? got a nice 5% on the stock and 71% on the short call vertical spread.
MFLX - nice ramp. Taking 1/2 off at 5% gain. Will see if we can break through the highs. Have itchy finger on eject button.
Tim, please pass along the link to the takeover news. I am not seeing that news, so the help would be appreciated. In the mean time, I’m short this turd until I say “Uncle”. The news I am seeing is that the Tribal denial by the Dept. of Interior was “ver dissapointing” to management. Other than that????? Any assistance you can provide w/ re: to your takeover news is appreciated.
Took off the remaining 1/2 position on MFLX for 7% gain.
Tim - really, I am looking all over for the NYNY news - cannot find it anywhere.
Lots of NYNY takeover links on TheLion.com, some obscure article, doesn’t matter who knows if its gonna come true or not, i just don’t like shorting stocks down so much off their highs
beautiful! too bad i cant short stocks under 5 bucks at scottrade, i was ready for this.
Tim,
Thanks for the info. I am going to press my short a bit here. The “obscure” article, in my opinion, is an attempt to allow those that lost their asses on this one to get out with some respect. Looking at the company info, the loss of the indian deal, the lawsuit afgainst the federal government (goodluck), makes this a play worth taking in the short term. Bottom line, V bottoms are rare and aint gonna happen for this pig. Makes it worth watching and entering a position. They have no real deal except for the one small track. C’mon. Why else were they trying to get in with the indians? That’s where the real gaming money is - not racetracks. Here in California, the racetracks are losing their asses because of the indian deals. Why else for the lawsuit? Because their company will be destroyed by their decision. No brainer. On top of that, the chart is looking sweet with the 7 days of runup to over 160% from the lows and a serios gap close lingering just above. I am going to establish 1/2 of my position here and then wait to see if I can average in higher at the gap close. Of course, price movement and volume will dictake whether I stay in and for how long. I do respect your opinion about the plunge it has taken to this point. But remember, there was a solid reason for the plunge.
Up 14% on the NYNY trade. Gonna wait for a weak volume retrace to add to my position.
nice man, post your trades here anytime!
NYNY entry 2.20
NYNY exit 1.62
Nice 26% gain for 53 minutes.
Tim,
Many thanks - always willing to share.
great call tim even thought there was a high risk it would stay up for three days-rock on
IDMI
Tim, your thoughts about if we break the 2.40 level? Another leg down for this one?
idmi, its under $3 so i cant short it, but probly will still downtrend
alvari40….what broker do you use? Thinkorswim also? Just thinking of switching over to TOS in order to be able to borrow those microcap shares. I wasnt able to borrow any!!!
Tim…with TOS are you able to fund your account right away or is there a 3-5 business day waiting period. So awesome you were able to borrow IDMI shares with no problem…I couldnt find any!
i dunno, probly a few days, just make sure u tell em i referred u!
Eric,
I usually use the broker that works with Tradestation since that is the platform I use. They usually are able to borrow the stocks I want. However, I had to fall back on TD Ameritrade when Tradestation wasn’t able to deliver on NYNY.
Tim…thanks always and congrats on your trade today! I will tell TOS that you referred me!
Alvari40…congrats on your trades also! Thanks for your reply…very appreciated!
alvari,
how and when did NYNY pop up on your screen?
shrtd 4400 shs NRVN at $3 covered @2.75 -
shrtd MFLX@ 18.95 —2500 shares shoulda sold more should i wait till tomorrow to cover or cover today almost a dollar a share profit already?
I use Tradestation “Hot Lists” and saw it this morning; however, I didn’t see it on the Yahoo % Gainer list, which I thought was strange. After the weak volume push up on the 5 min chart (following the push down), and after reading what was with this company, I made the decision to short. Matter of fact, looks like it is going for leg 2 now. I am not pushing it given the 25%+ gail already in the bank.
looking at maybe going long on SMTK news is out———————-
“NEW YORK (Associated Press) - Cypress Semiconductor Corp. said Wednesday it has contacted Simtek Corp., a provider of semiconductor memory products, to discuss a possible acquisition of Simtek, according to a filing with the Securities and Exchange Commission.
San Jose, Calif.-based chip maker Cypress beneficially owns about 3.2 million shares in Simtek, a 19.3 percent stake based on 16.5 million shares outstanding as of Oct. 31.
According to the filing, Cypress contacted Simtek on Monday to discuss a possible transaction. Cypress said it may seek control of the Colorado Springs, Colo.-based company through a merger or acquisition of stock, or may buy one of the company’s divisions.
Cypress reported taking a 15.7 percent stake in the company, or buying 11.8 million shares, in May 2005.”
or is it still a good short canidate cause price is still high??????????
Hey tim, just for fun look at NRVN it shot from around $1.50 to $6.00 and you guessed it back down again, but it did it too fast!! However its still up 71% for the day if it breaks $3.00 could be a nice stock worthy of shorting.
very profitable day today Tim hooray!!!!!!!!!!!!!!!
great calls on this board!
right befor close i covered all short positions and used capital to short TGAL 16000 shrs @-$5.
hope tomorrow does not dissapoint :)
hooray again for the little nimble guy!
tgal is an earnings mover, i never short those
better end of the day play was CTIB, ziploc deal talked up everywhere, low floater, hopefully it can really spike so i can short, much much higher
Good to hear we had a profitable day in a BEAR market! Tim your blog is awesome and full of great info and insights from other traders as well! Thanks also for teaching me how to short stocks and opening my eyes to all the BULLSHIP in Wall Street! Thanks!
tim, do you suggest we short on the close or short after it tanked?
i’m a pretty bad timer, so i don’t like shorting when a stock is this far off its highs, too much spikage potential by shorts who are too greedy getting caught
Interactive Brokers had NO shares to short this morning! So what was I to do, well at least I made $200 by going long after seeing a small bit of support around 2.60. Got LONG 1250 around 2.795; Sold 2.96.
Not as good as some of you guys but I made something out of not being able to borrow for IB.
I’ll take a $200.00 in 30 minutes. Even if I could’ve sold around 3.05, wud’ve, cud’ve, sud’ve…
NICE move TIMMAY!!!!
Tim, i just wanted to let you know i am not a hater just because of what i said yesterday. in fact i like your strategy and i am trying to learn this. i am trying to learn by watching your. and sometimes i have my doubts about you and that spamming is not the thing i want to learn if this is part of your strategy. but for now i think you are the one who is not spamming but the one who is taking advantage of the ones that spam by shorting them when the stocks go back down since it is dead on that these stocks are going to go back down close to the price where they were before.
about livermore, he shot himself not because he lost his $ but because he was not playing the game by his rules at some points. anyways, i find it good that i have learnt some more about your strategy over the last couple of days. and i dont think you broke your own rules by going into the IDMI trade early. in fact it is a small rule for you since you have to get your hands on shares if you want to make profits and i congratulate your for a nice profit on this one which brings TIM further and closer to 25k step by step.
hey tim,
i was wondering how you got that nifty “stocks that i’m watching” table on your webpage? did you do that, with the yahoo! charts popping up? btw, i made a lot of money today on nyny
yahoo quotes, my website designer has all kinds of fancy tricks, this guy rocks!
DESC filing shows 68% ownership is it next to be squeezed?
i don’t guess what will be squeezed next, i wait for actual signs, namely increase in price or volume. right now DESC has neither, it’s dead to me
Nice article. It seems there is an entire subculture of message boards addicts. There are many interesting pieces of information one can find on financial boards, some are actually useful - the “research power of many” in action! Although interesting, this information could be misleading… Look at boardcentral.com - they scan all major financial message boards out there and build most read lists, stock popularity indexes and even hype barometer. Informative and useful, some even say profitable information.
TIM, what broker are you using to short stocks under $5??
Thanks
nice
I hate to see the hype associated with these stocks and love the idea of selling short with them. Many brokers, however, don’t allow us to short the penny stocks. Do you have some favorite brokerages who do?
What broker beside Interactivebrokers allow the shorting of OTC and Pink sheet stocks? Why don’t you answer this question?