How To Short Sell A Media-Sponsored Pump & Dump
Posted by timothysykes on Fri 18th of Apr, 2008 06:39:17 PM
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I went into today thinking I wouldn’t trade cuz they were no ideal setups. But when $23,000-in-revenue-joke-of-a-company-TheStreet.com-pump-and-dump (EDEN) became a big 2-day runner, my market inefficiency sense kicked in and I immediately reserved 1,000 shares to short, just in case it might show signs of reversal. By 11am, it was up 40% on the day in the $2.60 range, and while there were some big buy blocks just below at $2.55 and $2.50, the sellers were persistent. This is what I call “a wall of sellers” and when stocks are up big already on little to no news with fading volume, this wall signals the end of any runup, at least usually.
Sure, sometimes the wall collapses and the stock surges, but since TheStreet.com’s article was factually inaccurate and it’d already proven three times over the past 2 days it couldn’t break $2.75, I figured it’d be better to be early than late as I’d just try to double up if it went higher.
When some sellers came in to try to take out the big 10k buy block at $2.55, I could stand aside no longer, shorting into that block and posting my findings HERE. Sometimes when a big buy block gets taken out, it signals an immediate panic, but even with my rather harsh article, that didn’t happen here. For an hour or so, it went slightly higher to $2.65, but I held, convinced my argument was sound. 3 hours later, the stock was only down to $2.30ish and buyers held strong—after all, my blog doesn’t have anywhere near the traction of TheStreet.com, so the truth doesn’t really matter…yet.
Going into a Friday afternoon short a surging illiquid low marketcap stock, you’re just begging for a short squeeze and since I knew I wasn’t gonna be able to watch this thing on Monday, I covered at $2.35, a $180 profits after commissions. Disappointing, but a very good trade nonetheless. Off by 10 cents on an ideal entry, off by another 10-15 cents on my exit, still earning 20 cents/share—the latest example of how great this strategy is that you don’t have to be anywhere near perfect to profit handsomely.
Little different from my successful trades on similar failing microcrap companies with tons of bitter shareholders: PSTI (Jonathan Lebed pump) and SYNM (day traders message board pump), this TheStreet.com pump coulda woulda shoulda gone down more considering it was factually inaccurate, but those other plays were good shorts for several days and weeks later, so I have no doubt I’ll be back in EDEN again…
Not talking about earnings, revenues, expectations nor the economy might seem strange to many of you, but those variables don’t matter in PennyStocking. I look to profit from basic market mechanisms—promoters/media pumping, suckers believing the hype, sellers/profit-takers eventually appearing, people’s stop losses getting taken out—because that’s what’s always worked for me. I truly believe these variables are more predictable than those mainstream variables and until I stop getting results with my method, I’ll continue to believe. 6 months into this quest, I’m up 47%…with the markets still down 5-10%, I’d say my results speak for themselves.
PS Note TheStreet.com corrected their article at 3:30pm causing a drop to $2.10, but still not many people read the corrections page, lots of naïve buyers in this thing still, and a little squeeze into the close to $2.30 justified my decision to get out.
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TIM Trades
View All| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| Nov 11 | IIJI | $2,79 | $2.95 | $442 |
| Nov 6 | CVI | $4.42 | $4.70 | $530 |
| Nov 5 | MECA | $3.68 | $3.95 | $490 |
| Nov 4 | CVI | $5.18 | $4.94 | $472 |
| Nov 4 | CVI | $4.83 | $5.01 | $333 |
| Nov 3 | NAK | $3.30 | $3.37 | $157 |
| Oct 31 | IDAE | $2.18 | $2.18 | $20 |
| Oct 30 | HSNI | $7.37 | $7.86 | $561 |
| Oct 29 | EVC | $1.97 | $2.70 | $1439 |
| Oct 28 | HSNI | $6.92 | $7.30 | $540 |
| Oct 28 | HSNI | $6.20 | $6.00 | $320 |
Total: $34,399 (177%)
Great trade Tim. You are an artist and the market is your canvas.
haha unfortunately the buyers were strong, makes my gain look like nothing more than a scalp
That was a really good catch.
Hype just like with Dupree and microcaps,
http://www.juiceanalytics.com/.....lbert-bump
Tim,
Do you see anything wrong with still being in this stock (EDEN) short? I did not cover because it didn’t really squeeze this afternoon, just bounced around a little.
nah u’ll probly be fine, but spikes are possible since it failed to go negative
Tim… what’s up man, i can’t even get a shout out on EDEN… granted i didn’t do the depth of research you did, but not even a minor head nod?? haha
nice trade though…
pump and dumps never get old, new ones every week!
I’m back guys and I’ve been doing my homework. Trying to understand this whole market concept. Thanks to all those that assist the newbies. We need all the help we can get.
One thing that I want to express to you is I’m not here for a get rich quick over night thing. I want to taste wealth!!
Much thanks to you Tim for taking the time out for us. Most people would have taken their money and ran.
Ok, lets get to researching. Anybody want to donate some site? I’m still on yahoo, cnbc, and cnnmoney for sources. I know its more info out there.
By the way, I’m loving the rewards from the big ‘V’
Well Trader Tim,
I guess we can call our little ’shindigg” about IDXX a draw..I made solid profits of +$4000, but I DID NOT get my FULL $5 move…I got something more along the lines of $3.75-$4.00 from my point of entry last Friday, but nonetheless profitable.
EDEN. Interesting one there. Thestreet.com pumps all sort of useless crap, no surprises there. Massive green volume though, perhaps just Opex mojo combined with pump and dump tactics, but I have it on my radar to short WITH IMPUNITY when the volume/price action say so. I am looking for a full $1 move.
IDXX was not a draw, u said it would drop $5, i said there was less than a 1% chance it’d ever drop or gain $5 within a week. it dropped $1.50 on the week and $2.50 if you timed your cover perfectly so u were dead wrong while i was dead right. don’t try to BS me, i see BS everywhere…the $ profit doesn’t matter, u took a huge position and got a tiny % gain. congrats on the profit, but next time don’t listen to crappy bloggers, listen to the price action and never ever set any price targets
On that last post there TIm, you said to “never ever set any price targets”. Was that sarcasm? I remember you saying just a couple of days ago that you hate “random ass trades” and that traders should have entry points and exit points. Are those two not the same as price targets?
Please explain. There was no sarcasm in this reply, just a serious question.
entry and exit point goals are diff. than price targets–i have no idea what a stock will do 5 days, weeks or months from now, i judge everything based on chart patterns and price action…a random ass trade would be saying IDXX will go down $5 this week…especially when it’s NEVER displayed such bearish volatility before
IDXX schooled you..You had no idea what you were talking about, kinda like reading your book.
YOU KNOW ( from the emails) that I GOT IN last FRIDAY, that’s when I started talking to you about it.
I made OVER $3, the point is it was a 6.5% gain in less than 36 hours on a 50$ stock. Sorry you cant understand that type of trading since you think gaining 2,000,000,000,000,000,000,000,000,000,000% on a .05c stock is admirable. Your tollerance for risk is unreal. So many newbies think your path is safe, COMPLETELY TO CONTRARY, it is probably some of the most risky trading available on the market. Like a total amateur, you invest ALL YOUR MONEY in one or two stocks. WHEN, NOT IF, a devestating ramp or crash happens, your little experiment will be done. OTCBB???? OTC??? HAHA….
IDXX target of $4-5, and getting $3+, ??? Yea, that’s a success. Pretending that you are somehow right, or proven correct is so hilarious, so typically you, makes me
chuckle. Kinda like how you ONLY focus on shit stocks, when you could open your fricking eyes and see things like WMG, which I gladly took over $5,000 from IN ONE WEEK! Bought 3,000 shares on Monday (for reasons you could not relate to your readers as you have no technical background or understanding whatsoever, event though you claim to. Ever use Fibonnaci on PENNY STOCKS?? HAhahaha, shit thats hilarious) when I saw the 8/34 period cross and continue to a 3% deviation from the mean, showing an obvoius intra-day/week breakout, which in the end I sold for a $1.75 gain on 3,000 shares for a profit of over $5,000. That’s TOTALLY WITHIN the abilities of your account. $18k invested in that stock on Monday’s 8/34 period cross would have given you more gains in one week than you have had in 5 months. I sold at $8.
Idiot.