Is This The Magic Stock Market Formula Or Am I Fooled By Randomness?
Yesterday morning, I got rid of my short in Dara Biosciences (DARA) at $5.15 for a decent profit but called it a pathetic exit. My exit turned out to be right around its closing price and I received several emails from people trying to comfort me, saying it wasn’t such a bad exit after all. But with today’s quick $1+ drop to $4, my call in this post yesterday for that exact kind of drop and my inability to hold and let the pattern play out, I began wondering exactly how similar are all these instances of this pattern? Sure my DVD is chock full of them (see an example HERE) and lately I’ve posted about them here, here and here, but maybe it’d be helpful to post them all together for once. Or maybe I’ve been staring at my computer screen far too long and I’m Fooled By Randomness?
Here are some recent examples of the pattern that’s haunted me for years, you guys be the judge:
The pattern cares little about what the overall markets are doing, isn’t exactly the same each time, price-action or volume-wise–it’s more of a general trend, it doesn’t discriminate by microcrap company—these are just the latest four in the last two weeks (last month, slightly higher priced COIN, SEED and AKNS displayed the pattern, which I wrote about here, here and here), the industry matters little—although three out of these four are biotechs, no does the exact price—just has to be low priced and each has its own “special” story, but in every case, message board pumpers claim “somebody knows something” and fickle day traders are involved long and short. Other than SHZ, all have been in serious long-term downtrends (hence my tired midget analogy) and probly the reason why SHZ is holding up better…for now at least.
I wish I was good at buying on the way up, but I’ve learned to accept the fact that I’m better at shorting on the way down. I definitely don’t have it all figured out, if I did I’d keep it all to myself and buy some nice little island like Iceland, but over the years, playing this one pattern has made me $1 million-plus, the top ranked short bias hedge fund manager from 2003-2006 (by Barclays) and now the top ranked trader/investor on Covestor. In fact, my oft-discussed losses came only when I strayed from this pattern. So, to those who say I only got lucky during the bubble, why don’t you suck on this for a while. Digest it. How does it taste?
Let’s hear what you guys think!
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| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| July 23 | MKTY | $4.73 | $5.40 | $187 |
| July 22 | MKTY | $4.10 | $4.28 | $240 |
| July 21 | ZYXI | $3.03 | $3.18 | $130 |
| July 15 | MNLU | $6.37 | $6.73 | $340 |
| July 11 | IDAE | $2.27 | $2.49 | $630 |
| July 8 | ERII | $11.29 | $11.00 | $162 |
| July 3 | TGC | $2.14 | $2.39 | $471 |
| July 2 | HYGS | $2.15 | $2.29 | $260 |
| July 2 | TGC | $3.44 | $3.49 | $80 |
Total: $22,457 (
81%)
1S Adams
February 29th, 2008 at 1:28 pm
My favorites CHNR and JRJC are on fire today. I’m hoping CHNR pulls SHZ up with it.
2Thomas
February 29th, 2008 at 1:47 pm
Hey Tim,
how do you scan for stocks?
3johnny blaze
February 29th, 2008 at 1:56 pm
O timmy I love sucking on those facts. You are so good
4lmsmith
February 29th, 2008 at 2:09 pm
I love the charts….. I believe-
I have noticed- while watching a few stocks - I am talking about at least two months- they have that pattern- I am not sure about the chart- I don’t know all of that stuff…I just look at the behavior of the trade, day after day- week after week…..if it acts the same way- then I take my chance and act….. just like the charts…. I guess pattern..
5timsykes
February 29th, 2008 at 2:35 pm
I scan for the biggest % gainers each day, if they can keep gaining for a few days then I’ll look to short em. See this post:
http://www.timothysykes.com/20.....ill-trade/
CHNR, nice $6 spike, LOL, scary to short
6Thomas
February 29th, 2008 at 2:47 pm
Great resource! Thanks Tim.
7Stan
February 29th, 2008 at 3:04 pm
hey timmy, check out HL
I really hate this company, they pump themselves up so much and have trouble keeping their highs esp around the $12 dollar neighborhood. You might think its a scary stock or something to avoid, just wanted to get your thoughts on it.
8Stan
February 29th, 2008 at 3:06 pm
also do you think MF has more in it to go down? I covered prematurely yesterday around 25 by mistake and id have made nearly $1000 if i held out for this morning as i originally planned. Chance it may dip a few more bucks on monday?
9Johny G
February 29th, 2008 at 3:14 pm
KRY anyone watching this turd? One of those “mining” plays… There is gold in them there hills, or not. Anywho, big spike upward this week. Pullback today, but still appears to have an upward trend in place. Also, they sold about 69 million in stock @ 2.1 to be used to for a new “gold mining project” in S.A. in the last month or so. (Possible base)
Any players on this one, or thoughts or just well know?
10Stan
February 29th, 2008 at 3:15 pm
hey johny, same thing with HL.. mining play.
11timsykes
February 29th, 2008 at 3:39 pm
as i posted int he forum,s HL and KRY are commodities plays, too many variables at work, not fluff plays like i like.
MF, too news related, unpredictable
u guys are used to playing anything and everything that moves more than 10%, if u gotta be more choosy
12Johnny G
February 29th, 2008 at 4:06 pm
K-O on the gold plays… KRY mid 1.6s to 2.34 high today… Is ummmm More than 10% (fuzzy math GW) Call me crazy, but 3s appear to b very doable shortterm. Not a huge TA (well maybe… hee hee), but the chart looks like an end to the downtrend, but anything can happen.
On the other side of the coin there were good shorts is RSH and GTXI this week after they had there huge pops this week.
13timsykes
February 29th, 2008 at 4:52 pm
This was a rather successful week, how’d everybody else do? I love sticking it to those sissy value investors, who of course, despite the “value” of their investments are getting destroyed along with the rest of the lemmings
14Al
February 29th, 2008 at 5:32 pm
Tim,
MNTA something to keep an eye on.
15Al
February 29th, 2008 at 5:34 pm
I managed to make $100 shorting KRY this morning.
16Aaron
February 29th, 2008 at 6:34 pm
I’ve been following your site and you’ve definitely convinced me. I just wonder if you won’t destroy your pattern though!
Say you’ve turned enough people on to this and a play like GRIN comes along (which is the perfect setup as I understand it and they only seem to come along every two weeks or so).
You have a group of Sykes bear raiders all trying to short at the same time right when the sideways action and volume start to melt.
Not sure what the result will be but it will be interesting when it happens.
Fun to hear all those 401k’s squealing in unison too. The only “value” stock I’m holding long (DRYS) got totally wrecked this week.
17Evan
February 29th, 2008 at 7:16 pm
Hey Tim,
Great job this week. I was wondering if you’d do a post on the stock (I think it was mainly one but I could be wrong) that screwed your hedge fund up because you didn’t stick with your patterns.- Maybe you could detial the thought process around that trade and why it was wrong.
18mike
February 29th, 2008 at 8:29 pm
maybe you should just buy his book and read the details
he keeps posting and posting and posting
if i were him, i’d be annoyed
19timsykes
February 29th, 2008 at 8:45 pm
Hopefully I’ll destroy this pattern, its taken up my entire life! Nah the patterns will just mutate, just as they always will and the suckers who just play the based on previous patterns will lose–the winners will be me and my students who can adapt to change
The CYGT trade that caused a 30% drop in my fund is detailed in full for basically the last third of my book. Not annoyed, just can’t post all the details because there’s too much for any blog/message board post
20Evan
March 1st, 2008 at 5:44 am
Thanks Tim- I’m real close to buying the DVD!
21Alvari40
March 1st, 2008 at 10:34 am
Tim,
I have one for your watch list: MNTA (my apologies if you already called it out). Biotech company that rose 26% Friday on no news. Watch list only. Gap close on the daily is only 67% gain from pop level, which is below your ideal circumstance for stocks to short. No sure how no news can propel this one beyond that level. Short interest is 19%; however, that is not enough to give us a 200-300% pop. Company has a solid float, so no low float pop in the offing. Bottom line for me, I will watch to see if we get the gap close. If not news comes out during that time, and volume dries up, I will look for a short scalp based on sell divergences on my 30/15/10 min charts.
22timsykes
March 1st, 2008 at 12:28 pm
MNTA is def on y watchlist but for right now its a solid breaout. would love to get another 1-2 day run though
23JMAN1234
March 3rd, 2008 at 8:27 am
Tim, seriously, will you go away? I thought you were annoying on WSW, but this is a whole new level. You are a piker, a nobody, a never was. God forbid anybody takes any of your “investing advice”. Take the 25 bucks you have left from your bar Mitzvah and buy a bus ticket to Nowheresville.
24timsykes
March 3rd, 2008 at 9:47 am
LOL, sorry JMAN, too much need for brutal honesty, too much opportunity in telling it. You take hwatever kind of advice you want, I’ll stick to whats worked for me for the past decade!
25JMAN1234
March 3rd, 2008 at 11:11 am
Whats the brutal honesty?? That no one would give you any money for your “Hedge Fund”.? The good news is the WSW 2 crew are even bigger tools than you are.
26timsykes
March 3rd, 2008 at 11:41 am
Buddy the hedge fund is long gone, get over it. It’s about the strategy. Whether I take full advantage of it or not, it lives on and I’m gonna be damn sure to teach it to everyone so they can do better than me!
27JMAN1234
March 3rd, 2008 at 11:46 am
You are a nickel and dimer. Strategy, dont make me laugh please. YOU ARE A TOOL
28timsykes
March 3rd, 2008 at 12:01 pm
actually if u had any research skills whatsoever, u’d see i’m a quarter and half-dollarer, not nickel and dimer. thanks for exemplifying the kind of idiots on wall street, truly, i must thank u, you and your kind are the reason for my success! keep it up, please never start reading!
29JMAN1234
March 3rd, 2008 at 12:05 pm
Idiots?? Are you for real? You wouldnt last two seconds on the Street dogboy. No firm would hire you. I pity the people taking your so called advice. Not too smart to take investing advice from a total failure.
30timsykes
March 3rd, 2008 at 12:08 pm
haha who cares about working for a firm? i’ve always done everything myself and i lov eit. as for failure, if u consider i have 60x after-tax and istakes what i had just 8 years ago, well, i always knew u weren’t very smart. stick around kid, u might learn something, for now, have fun in your cubicle
31JMAN1234
March 3rd, 2008 at 12:18 pm
Sykes, I could buy and sell you 50 times over. I make more in a week than you make all year. What have you done on your own besides lose money?? You are picking up pennies on garbage stocks is all, not making any significant coin
32timsykes
March 3rd, 2008 at 12:21 pm
u could probly buy me 100 times over, who cares? u do it just for the money, u have no soul. trust me, i’ve been there. individual investors don’t need to learn how to make millions, they need to learn how to make thousands. and for that my strategy is ideal. and teaching is fulfilling.
33JMAN1234
March 3rd, 2008 at 12:26 pm
Of course i do it for the money idiot, why be in the market if you arent looking to build wealth
34timsykes
March 3rd, 2008 at 12:31 pm
i already got the wealth and was still unfulfilled. sure i’ll take more, over time, but i love teaching and cutitng through all the BS so much more
35JMAN1234
March 3rd, 2008 at 3:27 pm
Big day today Timmy?? Up about 50 bucks/
36Tom
May 9th, 2008 at 10:53 am
Kinda ironic that im currently reading Fooled By Randomness. Anyone else read this book?
37Banana(TIMBUCKS: $7)
May 19th, 2008 at 11:31 am
Tim,
Do you watch both the order screen and the chart (in real-time) in order to ’see the whites of their eyes’? Isn’t the chart delayed compared to the order screen?
thanks,
Banana