CHATROOM

4 Stock Spikers Sykes Shall Short Sell Soon

November 24, 2007 at 4:13 pm
by Timothy Sykes

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By now you should understand that my core trading strategy revolves around the daily biggest % gainers (all conveniently listed at Yahoo! Finance). This kind of price action ensures that my prey, whether it be smallcap, microcap, whatever, will be liquid and volatile, aka ideal for trading. The trick is determining which stocks will continue spiking and which ones won’t. Here my take on 4 of Friday’s spike

rs:

E*Trade (Nasdaq: ETFC), $5.33, up 25% on merger/buyout speculation. Sure, it could happen and if it does, ETFC could would should be valued much higher. Buuuut news can come out at any time that could would should end this speculation and ETFC could would should get crushed. Who knows—like the XM/Sirius merger speculation, this is a classic Wall Street guessing game aka there’s no way to have more than a 50% chance of being right. I want no part of it.

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Circuit City (NYSE: CC), $6.51, up 20% on people dreaming that a strong holiday season will help their sagging stock (which is down from $25 a year ago). Like my call to short Stein Mart (Nasdaq: SMRT) on its bounce, I fully expect this rally to fail, but it is scary to short since shares have fallen so much already. Like SMRT, I’ll keep this on my watchlist, but I’ll probably end up missing it unless it acts perfectly (ideally going much higher to the $8 range, giving it some solid downside potential) and due to the risk involved.

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Ashworth (Nasdaq: ASHW), $3.48, up 24% on the same ridiculous retail optimism. Their stock has gotten absolutely demolished over the past month (down 50% since the beginning of November) and this is the one I’ll probably be shorting when the time is right. Much lower volume (good for me because I won’t get faked out by the intraday spikes caused by too much liquidity). Hopefully it gets to the $4 range, but I might just be dreaming.

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CIT Group (NYSE: CIT), $28.46, up 20%, on news that the $5 billionish loan company sold one of their divisions off. Ideally, this run-up will keep going ($30+ pleaseeeeee, offering a good spot to short in a few days (this isn’t the bottom because I know people who’ve been burned here will take this opportunity to cut their losses).

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Disclaimer: No positions yet

 

Posted in Short Selling

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  • Sean

    “..instead we got a spike over $3 and the shorts grabbing even more shares…all through the market maker “NITE”…probly citron?”

    Tim, do you have a way to know whether a sell order is a short or just selling off a long position? I thought there was no way to know this… For sure, it’s not part of my level2 quotes…

  • http://www.test.timothysykes.com timothysykes

    no way to tell, but after a while u can distinguish shorts from sellers, just gotta get a feel for the motives behind everyone…this sellers/short on NITE is determined, doubt he can be broken for it to surge higher so i’m out….sux, but thats trading

  • YoungGunz

    Man, glad I was out to lunch…Well the streak is broken. Your subscribers didn’t “manipulate” the stock like the nay sayers said would happen every time and you took a loss. Hopefully now we can get back to how it was before everyone was whining and bitching about how you’re causing stocks to move.

  • youngmoney19

    I bet you TimAlert subscribers will bank off of this pick, you’ve been traumautized by Cygnus Tim and now that horrific ordeal makes you sell a stock off quick before seeing if it can possibly bounce back.

  • gil

    damm lost $1300 bought at 3.10 sold 2.50
    should have waited to see the action instead buying it like a sheep
    especially with those small risky stocks
    at least i learned my lesson

  • http://www.test.timothysykes.com timothysykes

    no banking off this pick, sometimes the patterns just dont work out, gotta cut losses quickly

  • MikeY

    I covered my position at $2.42 with a ~$476 loss.
    Back to about even on my TimAlert trades.

  • krakken

    i just subscribed to TA and decided to use dummy money for a few weeks to figure it out. good thing with this one!

  • notesguy88

    Lost some too but overall I’m still up on my TimAlert trades.

  • pett.001

    my first trade…. uhuh…

  • notesguy88

    I’ve done three trades based on Tim’s alerts, NOBL, APII (great one!), and now FOUR. The losses from FOUR just cut the combined profits of NOBL and APII by half. Still not too bad.

  • VS

    my first trade took -2k losses. got in 3k shares at 3.10 and 1k at 2.90. all my guess went wrong. I knew i should not trace. but my mind didnot listen. sold all at 2.51. hopefully will get the losses back in TIM’s next pick.

  • TheParadox

    I would have probably followed Tim, but I’m still short on FOUR and i didn’t want to cover yet… I’m very aware of the greedy factor involved… but i got it so high up, i doubt it could return… The last thing i want to do is cover on a squeeze that shouldn’t affect me — max pain is at like $18 for me, a stupid bounce to 4 is just that, a stupid bounce.

    @ Tim
    I know what your saying with shorts/sellers… i watched what felt like 2 guys battle out a price, one felt like a long trying to get out above 7.20, the other was a short, and he didn’t seem to care… he pushed the long down to 6.75…

    Also, that’s some really really good advice/smart tactics with FOUR to go long and catch the squeeze, i looked at CNEX and i could just tell what you were after. You can see the price will about double from the bottom, and for FOUR that would have been around the $3-4… you would have came out better if you caught it earlier say on late Friday.

  • AdamN

    Saw Tim’s alert on FOUR, but after reading the Citron report from Friday, I decided to stay on the sidelines for this one, a very sketchy company for me to be comfortable buying.

  • benchrn

    My first trade off of TIM Alerts. Down $645 – bought 1500 shares @ 2.83

    TIM you need to get some more sushi while in Japan – get those protein working for you

  • YoungGunz

    I think the alert subscribers are so used to seeing you make the same plays that they’re not used to seeing you make a play on a potential short squeeze bounce. Hopefully people cut their losses quick since it didn’t work out.

    As you do more and more trades people will get more familiar with all the different types of trades you like to make in your nitch of pennystocking and can decide which ones they think are good ones that they’d like to do as well.

  • benchrn

    hahah buch of newbies on this getting burnt – whatever happened to biggners luck :)

  • TheParadox

    I caught ZYXI @ 5.95ish after the first morning squeeze and held it through the slight “up bump” and got it back after the second “Short attack” at about 5.56… Quite a risky move but I’ve noticed “typically* when Tim posts something, there is a morning short/squeeze combo and if you short after the bounce, you can usually wait and cover at a lower price that same day, with or without a major tank.

  • Cashiuus

    Side question for those who’ve been around for awhile. Scenario: You have 3 daytrades under your belt over the last 3 business days. You play into a stock today and don’t like what you see and want to get out while you can. Do you A) Get out and suck up your 1-time chance to waiver the PDT rule, or do you B) Soak up the losses to avoid hitting the PDT rule. If you choose B, at what loss % would you set as your wall before you decide to instead choose A.

    I’m curious because I’m at 3 daytrades currently and can’t decide what I’d do if I were to get into that predicament.

  • notesguy88

    What helped soften the blow from losing the FOUR trade is that I took a chance with UPFC on Friday. UPFC had turned red Friday afternoon and stayed red. So I shorted it in the $3.90s near the close. This morning I covered in the mid $3.60s giving me a little profit. That took the sting off of FOUR.

  • YoungGunz

    C take your loss, get out and never buy or short when you don’t have a daytrade left.

  • Cashiuus

    Good point, choice C) of don’t even enter the market, does sound like the best option. Thanks YG

  • kelvin

    FOUR is coming back up

  • TheParadox

    @Cash

    Yea, I’ve done that before, i made a trade and i didn’t have any day trades left, i had to sleep on the transaction and i didn’t feel comfortable about it at all. I ended the next day morning at a 300ish loss… the sysmbol was APII, which was a successful Tim trade too. Had a not blown it, i would have used that day trade the next day and made about 300-600.

    this is a mega squeeze on four, thats what time wanted to get in on, but it didn’t really last as long as he hoped. its weird how FOUR found support around 2.30ish…

  • notesguy88

    Is ZYXI a good short now into tomorrow? It just hit the intraday low and it’s been red all day.

  • kelvin

    anyone still on FOUR ?

  • http://www.test.timothysykes.com timothysykes

    why r u guys even thinking about ZYXI? do u not see support everywhere?

  • gil

    TIM look at POGS pump
    what do you think?

  • notesguy88

    Hey Tim, for me I’m just trying to learn and so I ask questions. Thanks for pointing that out. I tell you, I suck at reading charts and looking at support/resistance etc. All of this for me is a learning process. :-)

  • taxwise1

    Tim…Does your DVD teach about support.

  • notesguy88

    FOUR on a freefall now.

  • ragamoffyn

    Newb question: Do any of you know of a trading simulator that can handle penny stocks, or some other way to play with dummy money? Google hasn’t been very helpful…

  • YoungGunz

    Think or swim has papertrading.

  • ddopps

    In 1K FMD @4.05 out today @ 4.75 good $700 today. prob could have ridden even higher into tomorrow (already missed an extra .10), but thankful for my nice gain and call it a day :)

  • xilimmns

    ragamoffyn: you should use thinkorswrim papermoney application. Great tool!

  • Getshorty

    Today started the day long ZYXI, closed position at 5.88, saw it went down to 5.40 and bounce, then shorted at 5.86. shorted some more when it broke under 5.40. Holding 500 shares short overnight for being fisrt down day.

    Once it looked that RDN was going red for the day, i shorted at 4.25 then bounced in my face. Two mistakes. Expecting a financial to behave as a supernova and short in the morning, prime for fakeouts. COvered at 4.70 and went long from there hoping for a runup over 5, didn’t happen, recovered some of previous losses selling it at 4.78

    Still holding to my APII short from Thursday, today tried to test window (gap) and couldn’t make it, should go down tomorrow un less it closes the window, then I am out of there.

    First Tim loosing alert ever and I got in FOUR at 2.85 and got out at average around 2.50, proved that it is always good to cover fast if things don’t go your way.

    Overall, crappiest day in a while

  • ragamoffyn

    Thanks for pointing me to the thinkorswim paper trading tool. I checked it out and it looked cool. But I tried signing up, and they wanted me to go through a 20+ page registration process to establish a real trading account, followed by faxing in a signature. Probably easier just to create an Excel spreadsheet…

  • ragamoffyn

    Oops, forget my last post. Just a case of a bad user interface…

  • yaktipper

    This is the second TIMAlert I actually executed, although I made a note to not follow the alert in the future when it starts out “risky risky risky”. Good lesson, imo. In 2.85, out 2.51. I beat shorty by a penny.

  • YoungGunz

    Tough break for you first timers. Hopefully you guys got out quick and cut your losses before too much damage was done. That was my biggest fear when I made my first Tim trade. I was hoping and praying it wouldn’t be his first losing trade. It almost was for me though since it was ZYXI and I shorted and covered to break even with commissions. Since then I am up 47%

  • YoungGunz

    Cut them short when they don’t do what you want and let them ride when they do making sure not to be too greedy and take profit when you got it.

  • samyharmoush

    Anyone notice hat the thinkorswim trade desk was REALLY slow today?

    IDMI, cost me a solid 150 to get out of because the desk was so slow today.

    Holding 700 shorted shares of ZYXI @ 5.38… Dos anyone think it’ll drop 20 cents so I can atleast make a few bucks with a limit order tomorrow morning?

  • Reaper

    good play for me to miss. got the timalert but i was barely tempted. im about to see hellboy 2 now. tomorrow im off to the hot springs so i wont even check this website.

  • Gertsomething

    First trade with Tim and my first loss….

  • Dualmang

    even the best have their down days.

    Go get’em Timmay

  • Mark

    Tim, You shorted ZYXI on July 21st. Why was it OK then, but not now?

  • http://www.test.timothysykes.com timothysykes

    cuz now ZYXI has proven its not a one time spiker but a gradual rise…and they reported solid earnings