Adventures In Short Selling: You Need Buying Power Dummy!

Tags: TIM Lessons, Videos

TIM $14,617, Up $65 on the Day.

To anybody who claims there’s not as much volatility in microcaps since 2000 (hence I can’t repeat my feat), check out this chart!Awoke to find my account slightly higher for no apparent reason, then I saw Thinkorswim gave me $40 to celebrate my 40th trade in a month. LOL, that’s gonna be an easy $480 every year—Woohooo, I love these guys!

If you read my spirited post about AKNS earlier, you’d know being up $65 on the day is an insult. I woke up early to borrow shares of AKNS and SEED, just in case there was any pre-market strength for me to short into. Surprise, both had it. But I wanted to see if the strength would fade before I entered. SEED looked okay, but I wanted AKNS. If it broke $14, I knew $13 was coming, that’d be a nice $300 and maybe more, especially if panic drove it into the $12s.

Bingo, right at the open AKNS took out $14 and I placed my short with a limit of $13.75 to make sure I got it. But then I saw the big fat REJECTED on my trading software for the second day in a row. What was going on, I clearly had enough day trading buying power this time?

Nope. When I contacted customer service, they told me, I did have the buying power, but there was a glitch. They had to manually re-enter my order. Great, it was already too late. In those 2 minutes, AKNS dropped below $13, on its way to $12.25. No way would I have held all the way, I’m guessing an exit of $12.75ish. Bastards. This drop was PREDICTABLE!

Oh well, next. SEED, a much slower mover; I patiently waited for a bounce to short into. When I saw it, it was bouncing between $8.80 and $8.45ish, I wanted to short at the top of the range because I figured the dip buyers would eventually give up and it’d be an easy cover in the $8.30s when it broke $8.45. I shorted 400 shares at $8.81, content with my entry price and waited. Buyers were stubborn to give up, so I said screw it and bought my 400 shares back at $8.56, a decent gain, but I just couldn’t risk a short squeeze. Bingo, the squeeze happened late day, as another POS wannabe alternative energy play, (Nasdaq: COIN), was spiking. $90 profit, good entry + good exit=solid trade.

TIM Lesson: If a stock isn’t acting EXACTLY like you want/expect it to, get out, don’t risk a reversal.

Still had another day trade, so I decided to try and test my patience with a bounce play. Last night saw several quality stocks had gotten crushed over the past few days, VMW, TLEO, SIGM, CNQR, N, NVDA and ININ. Sure, there were analyst downgrades (meaningless) and competitor warnings (noted), but I thought I could buy one of these suckers for a $1-$3/share bounce. All we solidly up when I looked in the morning, but CNQR looked prime dip meat in the early afternoon, if it could just take out a 27,000 share sell at $31.45. It gradually did and I was one of the last to buy into that block with my 120 shares.

Unfortunately, more big sell blocks came, first at $31.10 (17k) and then $31.08 (27k). This wasn’t my game, and there was no telling what stupid institution was dumping shares so quickly. The stock was off $8 in a few days, but I couldn’t risk a big loss on a non-perfect trade. I cursed my need for daily profits and sold at $31, a stupid $70 loss, nearly wiping away my SEED trade. Stock rebounded to my entry and a bit more before falling back down $1 below my exit (a good short sign, but scary stock to predict further weakness). Good exit, but stupid trade. Discipline and alcohol needed. One vodka discipline please.

SIGM and TLEO look good here, but I don’t have enough capital to spread my assets around and TLEO is one scary chart to buy into! The solars all bounced mid-day, but ultimately fell hard, probly good overnight shorts, but I have appointments all day tomorrow in CT, so I can’t risk holding anything. This market is getting awfully scary awfully fast, good for me, people know sooooo little about short selling!

I’m in yet another Blog Carnival, The Festival of Stocks.

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