Feel Good Friday: Nailing A Perfect Short Sale On Vermillion, Inc. (VRML)

Was I bitter that a stupid mistake cost me between $750 and $1,000 in missed profits the first time VRML squeezed the shorts (as I posted helping other, not knowing I was already short!)? You bet I was! Was I going to let it influence my future trades on that stock or any other? Hell no!

So, after surging pretty much straight from $1 to $5, back down to $3 and then squeezing a few over confident shorts to $4 in a few days all on an ill-researched media story, on Wednesday, I posted how I shorted 1,300 VRML (all I could find) at $3.75, a little too early, but I was confident since I knew this thing would be volatile and shorts would be aggressive.

A few hours into my short, when it was a typical 25 cent profit (as you know I take too many of those) in the $3.50 range, I posted how I was gonna have patience on this one and cover under $3 cuz it was one of the few truly ideal PennyStocking Supernovas to pop its trashy head up in the past few months, even if as I also noted that this was the 3rd great shortable penny stock action in as many days (LGDI which I made $350 on and VRML round one, where I screwed up and lost $180, even while calling it perfectly for readers!)  

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Controlling A Stupid Trading Mistake Means An Opportunity Lost

Despite my rather long list of potential plays I posted this morning, I had two clear favorites—LGDI and VRML—two sketchy and failing, respectively, penny stocks that were up in excess of 100% over the past few days on fluffy news, a contract and a poorly researched NBC video claiming this near bankrupt company was gonna cure Ovarian Cancer (seriously, I can’t make this junk up), respectively again. So, at 7am (early bird gets the worm), I dutifully reserved 2,000 shares of each stock to short—as both were hard-to-borrow—putting my limit orders waaaaay above (or as high as my buying power would let me) their current price, LGDI at $5.49 and VRML at $3.99, intent on ratcheting the down if and when I wanted to short.

Fearful of a large VRML price surge, I commented on my blog post at 9:36am “cancelled my VRML order, not enough buying power to worry about it executing” and focused on LGDI—as it was weak the day before. Tried shorting my 2,000 shares right near its weak open at $4.35, but didn’t get executed…it quickly dropped to $4.10ish, but I didn’t want to chase it…fearful of a morning fakeout (proven correct over the rest of the day—good avoidance)

Next up was VRML, which was spiking from $3 to $4.75…I posted “VRML sooo thinly traded, let it run, I still have my shares borrowed for the day, just in no rush to use em” Whew, glad I canceled my short at $3.99, as I celebrated in a post at 10:05am. Still, at $4.25, everybody is talking about shorting it, so I post THESE rules about patience

But now at 11am, I figure it’d be good to re-enter my short, so I login…wait a minute—WTF, my short had executed at $3.99?!?!?! I posted my disbelief as I chatted with Thinkorswim to see if there was anything that could be done about this error.  

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Shorting Into Penny Stock Manipulation Works Wonders But The SEC Still Owes Me $500

Going into today, as I posted pre-market, I thoroughly expected to short LGDI because it had all the right elements—junky company, big run-up, toxic SEC filings and new today no less than 12 paid-for stock promotion pieces! (somebody’s paying biiiig $ for those)

So, I reserved 1,000 shares to short for the day. Been working myself dizzy lately so I looked forward to taking an early morning nap, but when this thing shot up from $4 to $4.75 before 9:45am—or a $140 million increase n top of its already thoroughly ridiculous $700 million marketcap—I couldn’t help but want to bet against it, excitably shorting 1,000 shares just off its highs at $4.62.

I know, I know, in my PennyStocking DVD, I preach again and again how important it is to wait until the afternoon to fade these suckers, but I am a trading addict so there’s really little hope for me. The good news is I’m an experienced addict so I never overdose—as undisciplined as this short was, it was a small position. Just as the stock jumped to $5 and I felt sick to my stomach for blowing yet another trade, I didn’t panic, instead reserving another 1,000 shares to short to get my average price up.

Since the chart’s already gone Supernova, I knew—yes I knew—the end, or at least a pause / slight reversal, would develop either today or tomorrow. That’s the beautiful thing about these plays—you don’t have to be perfect to profit, far from it, you just gotta get close and understand what’s goin’ on—and sure enough within an hour, after the volume faded big-time (meaning the hype fro the paid-for news releases had worn off) and it double–topped at $5, the tank was on so I added 500 shares—playing it conservatively—at $4.78 to get my average cost up to $4.67.

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How I Screwed Up These Two Near-Perfect Calls To Sell Short

Take a look at my latest two trades—shorting 1,200 shares of probable-fraud spam-happy BSHF into a morning dip at $2.55 and 1,000 shares of failing business-so-let’s-float-a-takeover-rumor VM into a nasty slightly negative close yesterday at $4.01—both of which tanked 15%+ within a few hours of market action of my shorting. Great calls to be sure, but I somehow managed to screwed both up–and judging from the comments, I’m glad many of you guys did better!

Unfortunately, the BSHF pattern appeared the day before this new website went live and since it didn’t tank in the early morning EXACTLY like I wanted, I covered for a $75 loss since I had a million things to do to make the launch. Didn’t feel guilty about it until later in the day when it tanked 50 cents/share in a perfect representation of a spam stock falling apart! Sad sad sad, but one of those rare unavoidable situations.

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Is Dennis Gartman A Classy Pump And Dumper? You Be The Judge

Let’s see what you guys think: after I labeled him a “classy pump and dumper” in THIS post, Dennis Gartman, the man himself, was kind/brave/classy enough to post this comment under that post:

Tim,

Warm regards,
Dennis Gartman

Dennis, thanks for your reply, I never meant to offend you—it’s nothing personal, it’s just business—tracking pump and dumps is my business. When Barrons publishes a list of your stock picks and COIN a.) is the only microcrap listed, b.) the company not only has a shady past, but is directly connected/managed by people with shady pasts and c.) you admit to selling into strength just a few days after that article, strength that was directly caused by your article, something ain’t right.  

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10 Hot Stocks And Why It Might Be Fun To Short Sell Them

VM
After missing out on perfect 10%+ afternoon fades both Wednesday and yesterday (dan you publishing business model!), I shorted 1,000 shares at $4.01 into the market close yesterday…while I’d have preferred to short into some kind of bounce—as it might bounce a bit early today—this thing had too many things going for it: first down day, filling the gap perfectly, after a multi-day runup smack into resistance, a strong long-term downtrend, a history of rolling over after spikes, a failing business, upcoming earnings (where they’ll probly fail some more, as is their tendency)…there are buyout rumors so it’s not an ideal play, but I’ve learned to trust chart patterns much more than humans. It’s really gotta crack $4—if it does, stop losses and the chart pattern should bring it down to $3.6-$3.75 eassssy…not as much downside potential as I like here though and given the tough environment lately, I’ll play this one somewhat safe

MESA
Nice gradual intraday and multi-day uptrending, TheLion was all over this and that’s why they’re on TIMfavs (many more websites coming soon…)

JRJC
It’s baaaaaack, this Chinese spiker is trying to do what it does best, kinda tough to do into such a multi-month downtrend, but it actually helps too cuz lots of shorts are getting squeeeeeezed. This is now the 7th big spike where the last 6 proved to be great shorts—no pattern works the same each time, they evolve baby, as shorts are learning  

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A Decent Profit From The Airport Lounge, Now I’m Up 50% In 6 Months, Jewww Yahhh!

First time around shorting sketchy-100-year-old-oil-company-that’s-watched-the-world-go-by PDO, I barely made anything before it spiked hardcore and proved itself to be a full fledged Supernova, squeezing those stubborn short sellers who didn’t purchase my instructional DVD PennyStocking (or else they’d have cut their losses quickly) and putting the stock on my back burner as a potential short. So why today—when I knew I’d be hopping all over the place on planes, trains and automobiles during market hours—would I look to trade this sucker?

Simple: cuz I’ve got years of experience trading while traveling and considering this is the 3rd day short-squeeze-induced runup inside of a larger 8-day commodity-related runup, the odds favored an intraday breakdown of some kind—large or small would be determined by stop losses, fear, commodity prices and volume.  

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

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.

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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.  

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