Breakouts And Breakdowns Galore, Brand These Charts Into Your Brains

Posted by timothysykes on Wed 20th of Feb, 2008 09:09:25 PM

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Last week they compared me to bigtime HF manager John Devaney, now Dealbreaker compares me to the SocGen rogue trader…what’ll those crazy kids think of next?

Check it out, a little sissy value investor tries not to be boring!

Lately, I’ve been comforted by not one or two, but several chart patterns that really exemplify the patterns I like to trade (although no true Supernovas yet). On the other hand, I’m still so bad at timing these trades while so good at recognizing them. Stranger still, this combination—which has been present throughout my decade-long trading career—has yielded millions in profits, even as I left millions more on the table.

Do I think I can improve? Yes. Does it really matter? No. Is it more fulfilling to help teach and profit from others learning because I know I’m doing good, blowing away all the BS scam artist/marketers out there? Yes. Is that why I now teach, write and publicize instead of focusing solely on trading? Yes. Do I think I can teach others to do better? Totally. Welcome to my rather unpredictable career path, I certainly never saw it coming.

Over the past few trading sessions, each of the top 4 stocks on my watchlist, IDMI, APWR, COIN and TITN—have displayed highly predictable breakout/breakdown chart patterns. I’ve screwed most of them up, but I know from emails several of my students of my DVD haven’t—guys, please post and brag about your gains to everyone you know and don’t know! Doubtful, probly wanna keep it to themselves…in any case, let’s use this post as a cornerstone, as you’ll all see, these patterns will repeat again and again and again…

Enough blabbing, bring out the charts!

Multi-Day Breakdown:

idmi2

IDMI, correctly shorted this one yesterday at $3.23, but it was a random short—just thought it would eventually go lower, even though no trendline had cracked—so I had little faith in it, evidenced by me getting squeezed out for a 3 cent gain. Today, the stock got downgraded, and it got whacked, I knew $3 was the key level and pre-market, it was hanging around there, but I hesitated. Too scared of a potential morning spike, I failed to think how I had before “since this is such a POS company, I’d have no problem adding on the way up”—and when I made my big gain last time, it hadn’t even cracked any key level! Poor line of thinking to be sure…

So, when I saw it bouncing in the afternoon to $2.70, I looked to get my 2nd chance…shorting 1,000 at $2.71…I knew from prior intraday support at $2.80ish, that was resistance, so I entered early in hopes of it tanking quickly. Bingo, right on, perfect fade intot he close to day’s lows, but it couldn’t crack. I have morning meetings so I took my $150 profit, after commissions and said good-bye. Probably goes lower, but not by much, at least anytime soon…not gonna risk not being here for it and lots of intraday support in the $2.30 range.

Multi-Day/All-Time Breakout:

apwr

APWR, correctly bought 200 shares at $18.46 into the close yesterday on the intraday and multi-day breakout of $18.30, but a weak market open, weak oil, weak alternative energy scared me out, so I sold at $18.22, a $50ish loss. Good sell as it went down to $17.75 and shorts got confident it was a triple top. But a mid-morning spike brought it to $19…then basing…early afternoon brought $19.25…then basing…late day spike to $19.50. Now, I hate the way this stock breakouts, 25 cents at a time followed by hours of nothing, the nothing could easily result in a quick fall in price I’d be unable to stem, even with my stupid little 200 shares. Only thing I did wrong here was not re-enter when it took out $18.50 in the morning—big fat round numbers like that offer short sellers protection (due to usual large blocks of sellers there), when they go, short sellers get panicky and squeezes are likely. But who really cares, I missed out on $200, IDMI is much better for TIM as 50 cents there coulda woulda shoulda been $500-$750.

Multi-Day Breakout:

coin3

COIN, correctly bought into the multi-day breakout of $10.75 a few days ago but was cursed by negative after-hours news, selling under $10. Today, I saw a similar spike and the bad taste from the last trade prohibited me buying this time around. Same kind of spike, just some bad blood between me and the stock. Like a little baby, I held a grudge. The only good news here is that it was not a new all-time high breakout, which no matter what kind of grudge, I def. would’ve bought into. This is another true POS company, so I’m scared to hold it overnight, you never know when the SEC will come in and halt it—much like CAFÉ of old (readers of my book know what I mean)—this stock is surging upwards, but buyer beware.

All-Time High Breakout:

titn

TITN, last but certainly least, because this is the only company that seems to have a real business. Bleh! With real business comes real valuation, aka less intraday volatility. (ex. APWR might move $5+, TITN limit is $1-2). This one had a perfectly simple breakout on anticipation of a high IBD listing. I didn’t play it, again, a little too high priced for me, thought it wouldn’t be that volatile and I can forgive myself for not buying into all that IBD hype, but how could I not use the same reasoning to convince myself to short into that ridiculous gap up to $21. What happened to it being a conservative stock—wouldn’t that put the odds of success of shorting into a $3 move in 2 days on a fluff event in my favor? YES. Time to grow up, probly would’ve only profited $1-$1.50, but those gains are predictable—they need to be taken!

TIM Lesson: Don’t sweat the small stuff, focus on true breakouts/breakdowns, cut losses quickly on fakeouts, don’t be afraid to re-enter again and again, if you wait for these all-important breaks, you’ll be supported by the self-fulfilling prophecy that is technical analysis, used by thousands of traders, aka the odds are on your side.

TIM Lesson: When your account is small, focus on lower priced stocks, it’s much easier to predict a 50 cent/share move on $3 stock than it is a $3/share move on a $20 stock!

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Who Is Timothy Sykes And Why Should I Care?

See Tim's full bio HERE. Tim turned a few thousand dollars into a few million by taking small gains time after time on hundreds of volatile penny stocks, discovering that his trading strategy, while consistently successful, works best for those with smaller accounts.

Determined to teach others this PennyStocking trading strategy (learn more HERE), he went back to his original $12,415 roots (already $27,000 even though the stock market is down 20%!) to show everyone how to turn thousands into millions, even while having a life (somewhat) and making plenty of mistakes.

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Hard work to learn how the greatly misunderstood niche of penny stocks provides opportunities every now and then on which you should pounce.

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Long story short, wait for stocks that are extremely volatile - for whatever reason - and then aim to take small profits (between 10 and 50% within a few hours, days or weeks) here and there, either from betting on higher or lower prices (yes, you can make $ betting on lower prices, it's called Shortstocking (learn more HERE).

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As Tim explains in several ALL-NEW instructional DVDs (see them HERE) and in over 900+ blog posts, penny stocks are the most hyped and corrupt niche in the entire investment world. These two qualities make them the easiest to profit from (legally) because the vast majority of people who play penny stocks are suckers and all-around ignorant people. If you have any intelligence whatsoever, you have a clear advantage and it's like playing basketball against mental midgets.

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