This morning, I nearly doubled my short position in Ashworth, shorting 500 more shares at $4.21, just as I said I would if and when the stock spiked, but then I covered my entire position at $4.01 just a few minutes later because this thing is not acting the way I want it to—it’s taking too long and I just don’t have patience! Total loss: $90 or so, including commissions.
I’m still negative on the company, but it&rsq
uo;s the price action that determines whether or not I take or hold my position—this one doesn’t have enough liquidity (especially for my larger position), I don’t like all the strength in the $3.80 range and most importantly, it seems to follow the overall market. My ideal trades are ones that are unique situations so the overall market has very little influence. As you can see from the 5-day chart, ASHW has been pretty flat in a waaay up market, but this morning, the market spiked and so did ASHW (I didn’t know if the dip I covered my shares into would be temporary or not). So, I played it safe and got out.
If I was a better trader, I probly could’ve squeezed out a tiny gain on this one—I had several opportunities, but up or down $50 or even double that—these figures don’t concern me, even at TIM’s current asset level. When I make a trade, I’m aiming to make $200-$1,000—if I’m right, any one of these kinds of gains will wipe out all my tiny losses and more.
Just as I closed my ASHW position, another interesting play caught my eye—Force Protection (Nasdaq: FRPT ). As those of you who have purchased my DVD know, while I like shorting intro strength, I also like shorting technical breakdowns. FRPT is a classic breakdown (at $15—a price that it had held no less than 5 times), cracking from $15 to $12 last week before bouncing back to $15.
Until today’s news of the Marines cutting back (questioning their long-term value) on MRAP vehicles (FRPT’s sole business), the bouncing around never really allowed me to short it with any confidence, but now I’m pretty confident (considering their entire business is now in doubt) that this thing has a few more dollars of near-term downside potential. I’m guessing the near-inevitable string of late-to-the-party analyst downgrades next week will do much to help my cause.
Since I’m a horrible timer, I wanted it to crack the day low ($11.80) before shorting so for most of the morning, I waited and procrastinated, telling myself it could still bounce since it was already down 20% on the day. Lo and behold, when the price did crack this magical level around 1:30PM, my broker had no shares available to short! Ah yes, the wonders of being hard-to-borrow and wouldn’t you know the stock cracked $1/share lower. Idiot—you must plan ahead! TIM Lesson: When watching a potential short, always check with your broker ahead of time to make sure you can borrow shares to short.
The good news was I simply had to open my handy chat feature and request shares—which, within a few minutes, is exactly what happened. But the stock was still down $1, so I waited for a bounce to short into. 60 cents higher, I shorted 200 shares at $11.20—a very small position, but, then again, even with the bounce, it was nearly 60 cents away from my ideal entry point.
So, now I really don’t know how low this thing can go. Until now, FRPT was getting ready to expand and produce more vehicles so they could better compete with larger companies that have entered this space—this development really throws a wrench in their expansion plans and basically entire business model. Right now I’m up about 25 cents/share, but I’m going to hold over the weekend because I think I can make at least $1 or maybe even $2/share on this one.
Disclosure: Short FRPT
