If At First You Short A Pump And Dump And Succeed, Try, Try Again!
As I’ve posted HERE and HERE, EDEN was a great pump due to a 100% spike caused by a fluffy inaccurate article written by a major media outlet—my former employer—for a bit—TheStreet.com (they later corrected it, but the damage was already done). The first time I shorted at $2.55, impatiently/conservatively covering at $2.35 for a decent $180 profit. But given its tiny tiny tiny $6 million marketcap and annoying illiquidity, I don’t regret covering quickly…that much…cuz as I’ve shown on fellow microcap pump and dumpers PSTI, REED and SHZ, these suckers remain good shorts for many days.
So, when I re-shorted EDEN mid-day yesterday on a slight low volume bounce up from $2 to $2.20, I had every confidence in the world we’d see $2 again and then the question would be if there were stop losses there—as often happens at big fat round numbers. Despite some ever surprisingly determined buyers and a solidly bearish close at $2.04—caused by a 49,000 share sell order—I was even more confident of a big drop today.
But it was not to be—yes it cracked $2—only after a lot of stubborn buyers at $2.01—but only a few stop losses went off taking it down to $1.97—nowhere near enough to get it to my goal of $1.80. For 20 minutes, I still gave it a chance, but the volume was just too pathetic, so I covered at $2.01, a decent $257 gain, basically 10% overnight, pretty much in line with my other trades.
Yes, this was a tight trade—I hate shorting tiny marketcap stocks—and no I don’t recommend taking a position bigger than 5,000-10,000 shares, but you gotta see that for all my $500ish in profits, my impatience made this trade a lot harder than it had to be. Although it certainly was a good cover as the stock bounced a bit the rest of the day on dismal volume, as usual.
Setup: inaccurate pump, erroneous buying, perfect spike to short sell into
Obstacles: illiquid/hard-to-borrow stock
Risk: possibly get squeezed by further erroneous buying (unlikely)
Reward: 15-50% retracement (probable)
Diagnosis: nice setup + usual obstacles + good risk-reward=worthy trade 
Action: short and wait for reason/bitter shareholders to kick in. Short at $2.55 was right, but then you just gotta hold down to $2, presto $1,000 profit instead of $500.
I never seem to learn to play these right so you guys learn for me, ok?
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May 16, 200810 stocks to watch today
PDO already up $1.25, sux I'll be away all morning workin' on TIMtv, got 500 shares reserved to short if need be this afternoon
Also reserved 3,000 FORC and KYUS for potential shorts
May 15, 2008Yup, by next Monday, everything's gonna be real working-like!
May 15, 2008PDO, up $4+ today, will teach you not to randomly short strong penny stocks, get in, get out then run...cuz sometimes they squeeze stubborn shorts to death!
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I wish I'd listened to my own rulebook, instead got squeezed for $400 shorting blatant-fraud KYUS too early...someone needs a refresher course this weekend!
I nailed NCOC's 20% rise today in my pre-market post, but I was too biased against buying little breakouts, learn from my mistakes!
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1AJF-ESQ
April 22nd, 2008 at 7:37 pm
what are the plays for tomorrow Tim?
2Dan
April 22nd, 2008 at 8:18 pm
My plan is to stay long SCA easy going to 1.50 this week then 4 soon.
3Ju(TIMBUCKS: $1)
April 22nd, 2008 at 8:41 pm
AH 7:44PM, 132,082 shares of BEXP traded at 9.75. Does these kind of big transactions have any significance? I was preparing to short BEXP today but after it broke 10 several time i changed my mind and BOUGHT on the dip to ride it up to around 10.10. So far its staying around where i got in. So does the big transaction like this help make support around 9.75? or is $1,290,000 (132,082 * 9.75) transaction even considered a big transaction to the market.
I’m new to trading and been learning recently, if you can tell me that i will find answers to my question on your DVD, i will order ASAP.
4Robert
April 22nd, 2008 at 10:25 pm
Tim - what is your definition of liquidity, how many shares need to be trading for you to consider it a liquid market
5umair
April 22nd, 2008 at 10:43 pm
Good job man…..small profit but a profit is a profit right…congratz…i just wanted to ask how do u find these stocks…do u look for biggest gainers for a day using a scanner and then study their charts????
Thanks for all your help…
6Brewster(TIMBUCKS: $11)
April 22nd, 2008 at 11:01 pm
Umair, you may want to search in old posts — many people have been asking Tim that lately and he has answered it multiple times. Not sure if you have the DVD, but he discusses it there also
7sonid(TIMBUCKS: $16)
April 22nd, 2008 at 11:12 pm
Liquid is a about anything over a few hundred thousand shares. You need to be able to get in and out quickly.
To find the stocks you should you usually check biggest gainers and message boards for hype as well.
Correct me if I am wrong but that’s about it for now.
8timsykes
April 22nd, 2008 at 11:48 pm
plays tomorrow will be posted around 8:30am
SCA is a piece of dogs#@t, random finance stock, stop posting it here
BEXP’s negative day means the odds favor shorting, but its not up enough to do so and u got support at 9.50…still wouldnt want to be long
liquidity depends on your position size, don’t be more than 5% of daily trading volume, but i prefer stocks trading between 200k and 800k, means many stupid small traders are involved
where i find stocks to trade:
http://timothysykes.com/2007/1.....ill-trade/
9Jibri
April 23rd, 2008 at 12:09 am
Hey Timmy where you at? Thanks for all the info.
10umair
April 23rd, 2008 at 12:51 am
Tim what do u think about EERG….. i know energy stock but it had huge spike today 88 percent…..good in volume too….is it good for shorting…thanks
11timsykes
April 23rd, 2008 at 1:04 am
i try not to short under $1
12simonyadig
April 23rd, 2008 at 1:17 am
And good luck finding shares of EERG.
13Brewster(TIMBUCKS: $11)
April 23rd, 2008 at 3:29 am
Liking PGNX long, thoughts?