How I Broke My Rules And Lost Short Selling A Fraud, Cannon Exploration Inc (CNEX)
Posted by timothysykes on Tue 13th of May, 2008 01:18:07 PM
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Just about everyone and their mother understands Cannon Exploration Inc (CNEX) is a an outright fraud. Whether you look at PinkSheets.com displaying a skull and cross bones with the tagline “Caveat Emptor” next to its stock quote, its now $470 million marketcap (at $7.25 stock price), the blatant pumping by all the usual suspects and the fact that this company has no business of any kind and has now septupled (7x) in price in 5 days all due to a fluffy PR announcing a new website and a sketchy letter of intent to acquire a seemingly real business, no doubt in exchange for pumped up shares.
Knowing all that, you might understand why I shorted 600 shares yesterday at $6/share half expecting it to go higher—with the goal of averaging my cost basis up too—but never excluding the possibility of a quick $1-2 drop in price.
That’s all well and good, but as a PennyStocker, I have no excuse and my $760 loss (I just covered at $7.20), including commissions, is well deserved. Because while this company is scummier than most, it’s just the latest pump and dump that can—and often do—run further than anyone thinks possible so I still should’ve played by the rules I myself created! Rule #1, don’t short randomly strong penny stocks, you gotta wait for the price action to concur with your thesis. Usually it’s best to short into the market close of the first down day of a big runup, but sometimes that’s too late, so shorting in the afternoon when this kind of a stock goes from positive to negative often opens the door to a big afternoon dump.
I did neither—confident in my small position size and the fact that it was already late in the pattern, I excitedly jumped in. To be fair, it wasn’t total confidence, it was also fear that I might not be able to find any shares to short today (right on with that guess), so the only way to get in would be to get in early and risk some pain. Risking pain on ideal plays like this is something I’ve gotten very comfortable doing on these plays, but I keep forgetting that it’s simply not viable with TIM’s assets so tiny.
Today, I gave it time for the volume, and ideally the price, to fade—only the volume has, somewhat—but the bids have only been getting stronger and the ask, which successfully held $7.20 until noon, just gave way to $7.25. Now that 5 cent break could just mean the sellers will take a stand right now, or soon, but it opens the door to the possibility that this thing could surge biiiig, and quick, especially if it closes strong today, squeezing stubborn shorts, made worse given the stock’s illiquidity. And when I say big, I mean another 50 cents-$2 within minutes or hours.
Shorting these things isn’t as dangerous as most people think, but it’s safe only when the variables are aligned—like when there’s a major crack in support like VRML did the other day at $3.40. Right now that hasn’t happened so it’s not safe. While this is an obvious error on my part/setback for TIM, I controlled my losses, not risking a $1,000+ loss.
So please learn from my mistake, don’t just short frauds because they are frauds—hate all these stocks equally, but don’t let it get in the way of waiting for the right variables…frauds can and do go up faster because they catch early short sellers in a bind…it might sound ridiculous, but CNEX could see double digits on any short squeeze…I’ll keep trying to find shares to re-enter—as most of my biggest gains have come after my biggest losses—since these stocks fall hard, if not harder, on the way down.
Now you can Twitter any questions/comments to TIMhelp and obviously you can follow TIM on twitter too!
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- | TIM - Timothy Sykes
- The Pump And Dump Blues: Nothing Compares 2 U, In Loving Memory Of Cannon Exploration Inc (CNEX) | TIM - Timothy Sykes
- May 2008 Review: The Only Real Mistake Is The One From Which We Learn Nothing | TIM - Timothy Sykes
- TIM 2nd Quarter Review: I Suck But Most Everyone Else In This Joke Of An Industry Sucks Worse | TIM - Timothy Sykes
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when did this stock first hit your radar—-and what price was it at……
I couldn’t believe only 5 days ago this stock was a buck— I guess when investors realize how much of a pos the stock is- it will fall as hard as TIGR did……..
Hey Tim on my level 2 I don’t see any orders for cnex, just last trade price. Do you have the same on TOS?
Now that’s what I call a really good lesson to be taught. Too bad you took the loss, Tim, but you know you gotta let the market come to you. Your honesty is compelling.
Ouch. Sounds similar to my Friday experience with NNVC (which I f’ed up my exit today…I’ll post on the forum about it)
puny vol. but mmgw worth keeping on eye on for the future
hit my radar when it was up 3 days in a row
honesty isnt tough for me, its funny that its revolutionary fo rthis joke of an industry
pink sheets arent on some level 2s, i use etrade pro for my charting/level 2 so its there
yngvai, yes please do post your lesson, we all benefit
jensgould, good find!
def. nice find Jensgould…mmgw up over 100% over the past couple days
tim what do you think about SSBx going up with out any news or anything..do u think its a good short?
SOLF on the move, seems like ABAT is heading higher.
god damn the host of this site, westhost sux! we’re gonna be unleashing yet another website in the coming days, same format, just better in all ways, probly gonna need a host too cuz 30 minute outages are unacceptable!
Who are the guys who usually do the pumping? Shady management of the company or some 3rd party?
In your trading platforms, can you guys see who is doing all of the buying?
Probably basic questions for alot of you but I’m just learning the basics.
Tim, bought your book via amazon today…
lots of various forms of pumpers as u’ll read in my book! u can see who’s buying based on market maker code, thats about it
Hey Tim , I’m thinking of opening an etrade pro account just for the level II access. Do they charge an inactivity fee? I’m trading with TOS so I don’t plan on funding that account but level II would be helpful.
its $100/month in software fees, no account required i dont think
Didn’t you just bust someone’s balls for asking a question like that?
I sure did…But i searched etrade and did not see that, they charge 100/mo for the software…I got no problem answering questions if you look first and can’t find the answer. But the question that he asked is like the thing brokers put on the homepage.
we’re traders, we bust people’s balls cuz its fun
That CNEX chart is the most manipulated chart i’ve ever seen.
I can’t even pull it up on the charting software that I pay for (and i have a OTCBB subscription)?
lol funny….STEC nice fade from $13….gettin near shit mode
tim is ssbx a good short any time soon????
STEc is an earnings play, odds ar eit goes higher, not lower
SSBX isnt down at all
u guys really have to just buy my dvd so u can have a framework of how to play these stocks and i can stop answering the same questions over and over:
http://www.timothysykes.com/dvd
YOu are no trader Sykes, you are a knob
I’m really surprised that TTWO hasn’t gone apeshit in the last week or two. The success of GTA IV has been just insane!
IGN has an article about how the game broke a Guiness record, not just making more money in 24 hours than other video games ever have, but ANY form of entertainment (films, books, you name it).
That has got to be worth something to the stock holders right??
Ok, is there something wrong with IOMIs chart at yahoo finance? Or is that really what’s going on right now? Looks a bit crazy…is this being pumped?
The orders coming through are ridiculous as well!
Jesseb, TTWO has been a huge short ame for almost the last two years. While the GTA franchise is a cash cow indeed, it really is the only thing they have to hang their hat on. Earnings estimates for 6/08 are for 1.82 per share loss. PRevailing thought is that the ERTS merger has to happen for them
Yeah…it’s true they’ve only ever even made a few games and GTA is the biggest. I guess they don’t have much to offer beyond that…
Also, IOMI I think you can disregard my last - looks like they are being bought out, that would explain the huge orders and weird chart…
I’m sorry but I have a confession. I’ve been very jealous of Sykes from day one. I wish I could trade like him, look like him, and be him. I maybe poor right now, but someday I’ll save up my nickels and pennies and I’ll even sell aluminum cans so that I could have enough to start trading one day. The poor like me are people too.
We know hater we know. It’s ok, some day you’ll make it with a woman and make $10/hr…don’t worry buddy, I have faith in you.
Real sykeshater1 here, I could buy and sell you all 10X over. Jesseb just be glad I will prob never meet your woman(if you have one)cause she would surely be in the back seat of the 750
Alright pikers, keep trolling for nickles!
I’m off to the Hamptons in my Harrier jump jet (it’s made in Britian, like my accent).
Cheeri-O!
Dan-o, are you done washing my car yet?? After that you can do my laundry, then take the rest of the night off. Good boy
LOL, he’s so full of crap. A dude with a harrier jet probably doesn’t even know how to use the Internet…rich people like that have others to do everything for them…what a douche.
tim - is there a way for you or your tech guy to add in a place for us to post spam mail? then we’d all get to see what co’s are trying to hype up - and be able to comment on it.
What are you going to do about cpst Tim? No news for a couple of weeks now so the next pr aught to give them close to a 20% one day pop imo.
Sykeshater1, You are so very small, pathetic and weak. The more you post, the more obvious that becomes.
The constant comments about other peoples “girls” and your imaginary status symbols out you as the sad immature little nobody you really are.
I truly feel sorry for you.
What kind of pathetic loser needs to try to pass himself off as a success in a blog forum?
God, I would cry myself to sleep if I got my kicks this way.
JJ, just talking about that today…
CPSt still aint worth my time/capital
new post is up:
http://www.timothysykes.com/20.....g-profits/
my act. got flag today at TOS. anyone have any issue getting it removed?
Mine has been flagged but it’s no big deal. You can still day trade, but you’re just limited in how much by your day trade buying power.
what is your evidence for this being a so called “pump and dump?”
uhhhh did u read the first paragraph?
Tim, what do you think about MVBY I think its any easy double from here.
mvby looks to go nowhere but down, as 90% of stock with that horrific pattern do
CNEX is the top loser this morning…we know…hehe
but how do we short this shit in their afterhours play?
A bigger question is what broker allows shorting these POS stocks? As far as I know Scottrade or Zecco do not.
i use and recommend thinkorswim to short:
http://www.thinkorswim.com/tos.....de=0907_02