The Old Morning Drop Following The First Down Day After A Big Runup Trick

Posted by timothysykes on Thu 24th of Apr, 2008 03:28:48 PM

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Going into today’s session with my overnight short of PDO, I was confident, if not ecstatic because I’d shorted into the first negative day of a decent-sized runup, even if it was KOG-like commodity play. At the market open, volume was very very light—5,000 shares in 10 minutes and yet when sellers took out the one bid at $6.20 that took it all the way down to $6.01…I didn’t want to cover right away as I thought it’d take out $6 and then stop loss selling might cause some panic, but bids piled up at $6.02, then $6.03, then $6.05…screw that, I covered at the ask at $6.15, making $27 after commissions.

Afterwards, some more sellers did come in and on total daily volume of 25,000 shares, the stock was $5.90 x $6—so I left $100+ on the table…boooo hooo, due to the illiquidity and it not being an ideal play, I played it safe.

pdofake The Old Morning Drop Following The First Down Day After A Big Runup Trick

I was ripping my self until just after 11am when those who didn’t play it safe discovered what an illiquid short squeeze feels like as the stock surged from $6 to $7.5 in under an hour. While I frequently miss out on easy gains, I don’t risk large losses or disaster—and that’s something which I’ll always be proud to promote, especially because PennyStocking exemplifies conservative penny stock trading (yes there is such a thing), where you don’t have to be dead on all the time to make money.

PS This is hardly unique to PDO, see FEED’s chart below—the key is covering into that panic selling caused by stop losses, then you just stand aside and watch the longer term shorts squeal as FEED pig f$#@s them!

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InvestorsLive

wow did VDTI ever just spike

Carlos

YEP, VDTI JUST SPIKED... GOOD I COULDN'T FIND ANY SHARES TO SHORT DURING THE MORNING!!!! ..... I guess somebody is taking care of me up there....

ViciousChicken

Hey Tim- I was on the road and couldn't check your site the usual 50 to 100 times today. I missed out on PDO as well, which is probably good as I would have been the sucker to get squeezed on the spike. Do you think PDO will still be a good play tomorrow, or has today's action changed anything?

Also, I noticed on a post in the last blog entry that someone asked about you're mom cleaning your apartment. Pretty damn funny when she found the handcuffs- that was classic. (Dave and Busters my ass). While we're talking about WSW- was that you in the Benz that clocks the curb? They always show that on the commercials for the DVD, but you can't see who's driving.

timsykes

it was dave and busters! nah i had a bmw 745li, the mercedes was alex the russian...as for PDO, refer to my post form yesterday about not shorting randomly into strength

Dan-O

Tim, have you reviewed the chart for CEGE? It might be too gradual for you, but worth a look.

Dan-O

It's a run up into earnings, May 1st, so it violates da rules.

Daniel

what do you guys think of pgnx

John G

'left $100+ on the table'

Not the way I look at it - your lesson should be never short a low float momo stock. If you were actually smart and followed the momentum, you'd of been busier trying to to find the pullback entry instead of trying to squeeze a few pennies against the trend. If you did the right thing and bought 700 at $6.22, you'd actually be sitting up $1260, by far your largest gain yet....yes, there is plenty of woulda coulda shoulda's out there, but one of the most important rules, is never short an illiquid stock with momentum in a hot sector.

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Date	Stock	Buy	Sell	Net
Nov 19	AENY	$2.80	$3.02	$1148
Nov 18	NLST	$4.16	$4.40	$947
Nov 18	IMGG	$1.42	$1.64	$2094
Nov 17	NLST	$5.04	$5.59	$2195
Nov 13	VRMLQ	$21.50	$22.97	$2901
Nov 11	EONC	$2.61	$2.80	$687
Nov 10	EONC	$2.74	$3.36	$9784
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
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Oct 20	CBOU	$8.93	$9.06	$243
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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: $98,094 (681%)