Don’t Short Sell Into Sideways Price Action Of Stocks That Are Still Up Big On The Day!

Posted by timothysykes on Tue 20th of May, 2008 03:12:59 PM

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Lots of folks either have shorted or are thinking of shorting confirmed Supernova MXC here just above $40. Their reasoning—it cracked sideways price action, mistakenly believing it to be the kind of price action I always—or at least should always—look for before Short Selling one of these rocket ships.

WRONG!

My kind of sideways price action can NEVER occur when a stock like MXC is still up $13/share on the day, or on FPP yesterday when it was up $1.50/share, because the longs have no fear when their stocks are solidly up on the day and that opens to the door to potential end of the day and tomorrow morning at the market open short squeezes. Because they know lots of short sellers are salivating to short these things, just as they were on MXC at $15, $20, $25, $27 (me, but I covered quickly for a-now-proven-to-be-infinitely-wise 40 cent/share loss), and on FPP at $4 (me, covered again, wisely now it seems for a 20 cent/share loss) on and on….

You stupid early shorts are the reason for these kinds of a move because you haven’t watched my PennyStocking DVD and are drawing the wrong conclusions from this blog that is no way shape or form to be considered investment advice or even the whole story for educational purposes.

Sure, you might get breakdowns, quick breakdowns to cover into, as JMoates learned scalping FPP today for nearly $2,000 in gains, but the odds are against any major breakdown because the stocks haven’t gone and are nowhere near going red on the day (FPP is right back near its highs now)

I can’t tell you how scary red numbers, meaning when a stock is down on the day, are to people who are long and up 50, 100, 300% within a few days—they start to panic, wanting to sell their shares and capture their tremendous profits. They use stop losses—which are great fun for short sellers when they get taken out on the downside as it’s like surfing a great wave of sell orders, ideally covering when the wave breaks (not that I know how to surf in real life, I’m an un-coordinated Jew)—and while you can’t predict exactly where those stop losses are, there’s a high degree of probability, it’s right around a stock’s unchanged mark on the day, usually at some big fat round number cuz they read to use those in some sugarcoated finance book written by typical industry scumbag who won’t tell you the whole truth cuz it’s dark and complex and he won’t sell as many copies to ignorant finance people cuz this subject is too unpopular (ironically caused by such sugarcoating sumbags)

Anyway, HERE is an example of worthy sideways price action…notice the big drop after the stock goes slightly negative on the day. I covered at $3, from $3.75, solid profit, but in the next 2 days, the stock went under $2.25…that’s the kind of short you want, where you can get your timing all off and you still make 20% profits.

Learn people, friggin learn!

And…when you have time, you can start with THIS totally unrelated but useful article, it’s by my good friend Dave Goodboy and it’s on a trading website that you should plunder for information.

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wes

I hope you guys all get squeezed on MXC. I'm long as hell. Holding overnight also, no matter.

timothysykes

wes, forget about the risk of shorting too soon, you're just asking to getting annhilalted...yes there's a chance of a squeeze but no more than 50% odds, go to the caisno, u'll have more fun

Alex

Anyone watching CPSL right now? Maybe going long...Thinking it could maybe go to $9 or $10. What does everyone here think?

wes

Why should I get out of my long position when its finding solid $40 support. Its up 48% on the day, with a strong finish which is 30 mins away, barely any fade from the intraday highs of 45, why wont it gap up again tomorrow? I'll sell tomorrow morning and avoid a PDT.

timothysykes

uh alex it just broke intraday support, dont even think about buying it for short term

good luck wes

wes

Shit im thinking about going long on FPP and PDO for tomorrows all too typical gap up

Max

called 3 stocks out for potential overnight shorts in last post

around 1:30 pm

bids when I posted:
CPSL 7.79
SUTR 8.60
CDY 3.36

only 1 reversal so far

asks are now
CPSL 7.36
CDY 3.31
SUTR 8.84

disclosure: no positions in any

ivegotstylekid

cpst looking to break out nicely, anyone else liking this play?

wes

Oh and dont forget ROYL, im going to go long on that too.

Idk what i think about EWST yet, alot of scalpers playing that today.

timothysykes

CPST is nice but gradual check out MGW, now that a breakout, god damn i wish i was good at buying too

Alex

Tim - I was thinking for a swing trade (2-3+ days) ... my reasoning is the huge volume after earnings maybe institutional buying ... I'm thinking of a stop just below $7, with a target of $9-10 ???

Alex

but you're right - CPSL woulda been a good short after it failed intraday support of $7.60

Davey

Bad trade out MXC at 42.40

wes

Alright I did it. Long FPP, MXC, PDO, ROYL. Selling first thing tomorrow morning, within 1 hr of open.

ivegotstylekid

yea tim mgw is a lot better looking breakout,do you disregard the breakout if it's too gradual

Alex

FRG and LNG are a couple more energy plays popping their heads up.

CPSL closed with a 33K share buy!

Max

that's a lot of exposure to low-float energy Wes, good luck!

traknologist

I've been long on cpst for a while now.

Why would anyone buy cpsl? Don't do that to your self.

Tony Ellis

WES has bigger balls than me for sure. Although, my dumb ass is holding IVAN overnight. The one oil stock that can't breakout with oil @ $130. That's what I get for trying to trade while I'm on vacation.

getshorty

You'll be in my prayers Wes.....

Matt

Thanks, Tim. I really didn't consider MXC to be a classic sykes pattern, since it was my first stock trade, it was more like "pick the top".

I see people here doing all kinds of things - momentum plays, scalping, technical analysis, just plain wild ass guessing, as well as looking for the perfect sykes style short.

Will play the dvd again, and take more notes. :)

wes

Thanks getshorty, i'll have alot on my mind before I go to sleep tonight for sure, but im pretty sure we will see another gap tomorrow morning on all 4 of these. Anyone want to suggest reasons why we wont?

jesseb

I was watching FPP and PEIX all day...I should have bought one of them in the morning but I didn't know what was going to happen.

PEIX is down about $1 from where it's high today, so maybe I should have bought it today before the close? Or maybe tomorrow morning for some quick profits.

I'm afraid that it's going to come back to reality so I'm being damn careful...

Also, I noticed that the site is now "www.timothysykes.com", that's probably why my shit was hosed all day...You guys must have changed the DNS info, I couldn't get to the site at all the entire day.

"Updating site: check back soon"

Fuckin' weak...

Stephen

Wes, gl man. Seems like a lot of eggs in one basket though. They're all the same play really. Broke out together, odds are they all tank together. If it goes bad it's going to be really really bad. If it goes well, you're going to be banking a fat profit. Hope it goes your way.

jesseb

Personally I don't see what's wrong with his play...maybe buying too many is a bit scary - too much to keep track of.

However, several of these stocks have, for the last few days, gone up in the morning, peaked in the afternoon and then dropped back a little.

Worst that could happen is they go up in the morning, he makes a good chunk of change, sells it all off, and then in the afternoon it either fades slowly or completely tanks...regardless Wes wins...no?

JMoates77

Hey guys I'm back! Had to finish up some work. Thanks for the kudos Tim, but I really just listened to your earlier post about seeing more red than green. So I switched to candlestick and viewed the stock by the hour on TDA. Worked out perfectly.

Wes, you are a madman! You must have an extra ball or something to have that much testosterone running through ya. Good luck buddy.

Can't wait till some of these supernovas start coming back down to earth.

wes

Jesseb you know it!
I'm not planning on keeping these any later than 10:30 am tomorrow morning. Im betting the gap, im selling. it doesnt gap, im selling. Up 1% in afterhours if that means something.

The gf says I have larger than usual balls

sonid

Wes I think the FPP long was a god overnight play. We all saw the capability these things have. It was less than a month ago we saw MXC around $5 / share. If we jumped in on that and rode the way I think we'd all be laughing our way to the bank right now. Well good luck to all.

sonid

anyone else in something different long or short overnight?

dome

timmy

lucky you

you are good with money and blondies girl

i like your new site

Tony Ellis

Tim, what do you think of RAME? I'm really liking the chart...to bad I'm on vacation and can't trade.

Mike_13th

sonid,

long overnight JYTO QTWW FRG MMGW BEXP
all closed near their hods

jesseb

Heh, SSN and GBR both have ask prices of 301,000 right now on TOS...think that's an error? :P

Jibri

Enough being a spectator, I just got my tax check. I'm going all in!

Fantom

hey Tim I didn't get my email for logging into register.

fantom711@yahoo.com

Fantom

RXII
RXII
RXII

whats the deal?????

JensGould

Fantom check your junk mail, that's where mine ended up.

Tim nice work on the new site. I liked the other one too, but this is much much better, and more user friendly too. Just as a heads up when I click to go to your site, I get a message that says "were updating: check back in a bit" then in if i refresh the page it loads the website.

Personally I think wes has a really good chance of making a quick buck on all the small cap oil and gas exploration companies solely because I think a lot of people are thinking the same thing. You can see they're all up on tiny share orders AH.

I on the other hand, let my ego get the best of me, and stupidly held onto my fpp short throughout the day. I was right when I shorted at 5.35, 5.49 and 5.70 but just dead wrong when I didn't cover in the 5.25- 5.30 area. I'll short more if I see weakness in the spike otherwise I gotta humbly admit i'm wrong and cover. I gotta get your dvd's back from my brother!!

Evan

To all shorts of MXC- be patient and this WILL tank. I'm short at 38 thanks to TOS getting me some shares while I was working today. I don't intend to cover at a loss, and here's why:

http://scientifictrades.com/2008/05/20/mexco-en...

ps- Tim, the login page for Timbucks isn't working.
pps- Wes, you're probably good for a quick profit and get out of jail card in the am, but jeez man- something like what you're doing could really wipe you out one of these days!

wes

up 3% afterhours. looks like its going to be an early morning squeeze for the shorts

investorslive

MXC - the consolidation above $40 all day scares me....it may just be starting lol

Scan for tomorrow

http://www.investorslive.com/blog/2008/05/tuesd...

PortRichey

From what I gathered from all this chatter, is that,
all the shorts are covering first thing in the morning, and it's going to send em all through the roof. Can you all withstand another 20% hit? I'm just gonna sit comfortably back, watching it climb, with a 5... no 3... better make it a 2 dollar trailing stop. MXC with an easy 65.00 by 9:50am. Cries of "Noooooooo" will carry through the air. LOL Gluk men.

D

I don't know how you can time the shorting of this stock but I sure missed the buy signals around $8!!!

Adam

Got PDO reserved, couldnt get MXC. we'll see what happens today

timothysykes

can't find any shares of MXC, but i reserved ROYL, FPP and PDO...just not enough trades/capital, but this could/should be a multi-thousand profit day when these things crack

Ryan

However, there is no sign of turning these MXC, ROYL, FPP, PDO junkies yet! I tried to reserve MXC if it hits $55, but no shares available.

wes

GOD DAMN THIS IS LOOKING GREAT!

I wake up to see that im up 10.5% overnight on my ROYL,FPP,PDO long position.

wes

Hey tim, whats your advice with using stops, stop limits, trailing stops on trying to capture some of these early morning spikes.

Yesterday I got stoped-out on MXC which severly limited my gains and even produced a loss onetime when my stop when off on a random gap dip which was quickly filled.

If im watching these like a hawk in the first hour of trading for a potential exit should I just execute using market fill orders and have no stop order so I dont get randomly taken out on some random price gap?

timothysykes

i've never used a stop nor a market order

theproficientinvestor

This is exactly the opposite of how long traders do it. In a long trade, you take your profits on the strength of the price, even if there is more upside, you can't predict a top in most cases even if you are going by revenues as a guideline. Selling into that strength ensures you make money. Same as shorting into weakness. As they say, stocks breaking new highs tend to go higher and stocks breaking new lows tend to go lower.

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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
Oct 22	AMLM	$2.69	$2.97	$820
Oct 22	USEG	$6.12	$6.09	$85
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%)