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Frustrations Of A Short Seller

Posted by timothysykes on Tue 15th of Apr, 2008 09:14:16 PM
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Awoke to discover no shares available to short of my top 2 potential plays—FEED and PSTI. PSTI was no biggie, it wasn’t a multi-day runner, but missing FEED pissed me off cuz it was a nice morning setup for a solid PREDICTABLE fall.

feed Frustrations Of A Short Seller

Yesterday it looked like it was getting tired, but it still wouldn’t crack. Today, near the market open, there was a 14,000 share buy order at $15.40 and as that got taken out rather quickly, it was clear sign to short as longs who were up big over the past few days surely were afraid of a reversal. Sure enough, the morning tank was on as it quickly took out stop losses at $15 on its way to $14.70-ish, a nice 70 cent/share drop from an easy entry. Sure, it rebounded over the rest of the day—impressive really, but then again it’s a true breakout so I expect the stock to be stronger than a pump and dump—but the play here was to cover into the stop loss panic. Next!

As I mentioned HERE, CNOA tanked big—24%–and I didn’t profit one cent. Hope you guys did!

Looked like it was gonna be a non-trading day, but then in the last hour oil and gas multi-day runner, KOG, after a big morning spike and drop—a classic sign of the beginning of a reversal—broke perfect sideways price action at $2.80, so I shorted 2,000 shares at $2.75, just as it was going negative on the day (as I preach in my instructional DVD PennyStocking, short sell big-time multi-day runners that are in strong long-term downtrends near the market close on their first negative day…usually you get either a small morning drop followed by a big afternoon drop—as the realization by the longs that it’s heading lower takes hold—or a big morning panic)

Unfortunately, this is a commodity play traded on the AMEX—two of my most hated variables—so after cracking PERFECTLY to $2.65, some shorts were squeezed into the market close, as it closed at $2.75 (I don’t count the 200 share painting the tape by some desperate long to make it appear green on the day). I’m not that worried, maybe it’ll take an extra day of holding, but the problem is I’m flying to Buffalo tomorrow and don’t get in until noon—so I’m flying blind on this trade, which I absolutely hate! Obviously it makes a new higher high above $3, I’m screwed—although not definitely cuz it could be a fakeout breakout—but if it stays a little negative on the day, I think the odds are good for a 10-20 cent/share drop, and then we gotta see how far down it can go. Not an ideal trade by any means and yet I’m short overnight…
kog Frustrations Of A Short Seller

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  • That's when your supposed to have your friend watch your account with specific instructions "If it dips to 2.65 go ahead and cover" but never allow them to trade as they feel, they'll end up covered at $4. I would hate to see it dip out of open a few pennies and rip back up, but this thing is getting toppy and at some point it has to take a dump down
  • BTW whats the reasoning for speaking tomorrow, similar to your interviews... or is it about something particular? or just a general Q and A
  • GabeC
    Its up 3.94% after hours. Uh oh big morning spike, possibly, before tanking?
  • GabeC
    Kog I mean. scared?
  • timsykes
    speaking at university of buffalo tomorrow night.

    AH action is a few hundred shares...not very scared, i can even add to my position
  • bee
    i shorted FEED at 15.4... and SOL at 12.7... man. i dont know what to do now ..
  • I knew it was at the U of Buffalo, just wondering what the topic is, are you speaking about what you do, finance in general, entrepreneurial ventures or a specific topic geared towards the university?
  • timsykes
    i got a whole university speech to get students interested in finance/stock trading
  • pete
    ordered your book, im gonna figure out this crazy penny stock short slope trading yet!
    BOOOO yA
  • Oliver
    bee, why would you hold SOL for so long. haha. you do realize that this thing is $15+ now.
    hopefully you have learnt a lesson that tim has been preaching since he started this. CUT YOUR LOSSES FAST.
  • Vaibhav
    Tim,
    FEEd went up to 16.00 in after-hour trading session.
    What do you say- should I short sell it early in the morning?
  • timsykes
    no u dont short strong stocks randomly, now its already consolidated and shaken out the weak hands.

    also u guys gotta stop caring about petty afterhours action, it's like 500 shares, unless there's big volume/news, its meaningless
  • bee
    do you guys think that SOL will pull back a bit and i can cover ?
  • Oliver
    bee- i dont even think i would wait for the pull back. its not such a microcrap company with market cap of 1.5B. i would just get out of there, get over the loss.
    i cant really find ANY reason for being short in there in first place. nothing of what tim has been preaching was in that stock.
  • monkiman
    Hey bee, welcome to my world, hehe. If SOL keeps goin up today, might else well listen to everyone here and cut your losses quick. But I recently shorted 1,000 shares of TITN @ 21.75, and it went up near 23, so I had a huge loss, but luckily it came around, and I covered @ 21.38 yesterday.
  • Tim,

    Don't forget, when you're giving your speech, to mention the VO.

    Also, don't get in any trouble with the college chicks.

    -DT
  • Note: This is an experiment...

    I'm sorry... I meant to say, hot, eager, naked college chicks

    -DT
  • lmsmith
    Who ever held on to their FEED SHort- Is Getting SQueezed real bad- It's up 8.3% in pre-market
  • Vaibhav
    Tim,
    Feed had already crossed 17 this morning. Do you think it is the right time to short sell it? It has gained more than 40% in last 5 days, a phenomenal jump.
  • timsykes
    40% is nothing, i don't short randomly into strong stocks, thats how u get squeezed. wait for the setups i outline in pennystocking
  • Keith E
    How come all the short opportunities i find that look great on the charts dont have any volume on average?
  • Keith E
    A few examples are GENC,BSM, both have had good runups inside of a month but low daily volume.
  • Keith E
    KOG looks like something to watch
  • chad
    Why try to short a stock that's in one of the strongest sectors? Sectors strength will move garbage stocks up...why not stick to week sectors, then find the stocks within that sector that have the weakest relative strength when compared to its peers...anyhow....like your site a lot and generally like your trading style!
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Date Stock Buy Sell Net
Nov 6 QXM $4.31 $4.80 $1936
Nov 4 COT $8.66 $8.88 $642
Nov 4 QXM $4.61 $4.89 $822
Oct 30 DDRX $25.70 $26.53 $812
Oct 29 CTDC $4.00 $4.42 $781
Oct 26 AWSL $3.24 $4.10 $2516
Oct 23 RODM $5.27 $5.23 $301
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Oct 20 CBOU $8.93 $9.06 $243
Oct 16 VRMLQ $16.79 $18.65 $2773
Oct 13 YONG $11.05 $11.66 $1202
Oct 13 NPHC $0.59 $0.71 $583
Oct 12 IMGG $0.60 $0.70 $682
Oct 9 ZAGG $5.50 $6.10 $2380
Oct 7 GVBP $0.03 $0.27 $702
Oct 1 NPHC $0.70 $0.85 $1482

Total: $92,304 (644%)