Screw Vegas, Screw Wall Street, Welcome To The Gutter, There Be Gold Yonder!
Despite the marketing efforts of low priced stock pumpers on all the message boards, I’ve been rather negative on Force Protection (FRPT) for a while now—I hate when management says everything’s fine when clearly, as evidenced by the near perfectly downtrending stock chart and negative comments from its major customers, everything’s not. But with Friday’s orders (already expected) and this weekend’s positive NY Times article, maybe, just maybe, the perception tide is turning. I’ll wait and see if the stock can extend much beyond Friday’s 10% rally—and while I doubt we’ll be seeing double digits anytime soon—there does seem to be a base forming around $4, so the downside appears limited. Then again, when management loses credibility, who knows what to believe (other than the stock chart, that is). If you think I’m not taking a stand on this one, you’d be right, too many conflicting variables for my tastes.
Much clearer to me is one of the worst public companies in existence, Nanogen (NGEN). I was shorting them back when it was briefly a stock teenager (early 2004) and you were in diapers (penny stock knowledge-wise)—and I even detail losing quite a bit on this one in my book (it took me a while to learn never to short in the morning due to the risk of severe morning spikes, aka morning spikeness) (woahhh, how cool is that phrase, gracias blogging)…How beautifully bearish is the 1, 2, 3 and 4-year charts–those Picassos of failure–all you have to do is bet that their continual failures will influence shareholders to sell rather than buy and you’d be right.
But I can’t even give the company credit for being such a perfect failure because this chart is true for most biotech penny stocks. That’s right, NGEN can’t even get failing right, they’re a failure at failing, too, especially now because the stock is trying to bounce off its 25 cent lows. For shame! Why can’t they just stick to do what they do best? Well, I guess it’s just human nature to be optimistic and that’s why they have some new management and financing, oh well, just a bump in the road until their probable doom, hopefully they’ve hired some penny stock pumpers to get their price up enough for me to short into. Oh wait, they already have! All disclosed (as legally required) (what a joke) at the bottom of the PR for the “research report”!
C’mon Dutton, you got your $140,000, now get to work, you call a 10 cent rise to 45 cents something to be proud of?!?!? Bleh! I can send out a newsletter and get a crap stock up 10 cents and I’d only charge $50,000! (Not that I ever would). I’m just writing this to get you pumped up (I pun, I pun)…so, come on, get this stock over $1 so it becomes a worthy short! Get it to $2 and I’ll get you something from the Apple Store
And then there’s China Shen Zhou Mining & Resources (SHZ), a stock so screwy that even Thinkorswim didn’t recognize the symbol when I tried to buy and then later borrow shares to short into the company’s 50% Friday run-up (supposedly to be fixed by Monday). You don’t have to be as cynical as me to be weary, this is a Chinese metals company that just moved from the Bulletin Boards and whose stock has admittedly been manipulated in the past.
Who knows and who cares what was responsible for the spike—metals are surging, the message boards were jabbing away about it, blehhhhh—all that matters is how it traded. Despite the biggest volume this stock has ever seen, during its afternoon spike, there was a ridiculous spread between the bid and ask—think 20-50 cents—because the buyers weren’t random or gradual, instead, it was just a few big market orders of 5,000 to 15,000 share blocks taking out whatever sellers out there, 6, 6.50, 7, 7.25, they just wanted to buy at any price!
And, so, as much as I like shorting into manias like that, you really have to be extremely careful because stocks like these can go up $2-$5, sometimes even $10 within a few minutes and hours. Those super-spikes can be averaged into from the short side, but do it verrrrry gradually because you never know how long they’ll last. When the big block buyers are all in, there’s usually a quick drop followed by a gradual decline as sellers and reason re-enters. Manipulation? Blatant! Is it the company’s fault? Doubtful. Can you learn to profit from it? Definitely!
Think I’m overly cynical, whatever, this is how I play PennyStocking. Less cynical but just as knowledgeable people should enjoy greater success than I’ve had. Either learn to play by the rules or get slaughtered with the rest of the suckers who buy into all the BullShip!
SEC Fun Label: No positions, just explaining the game
PS To the penny stock promoters/manipulators, don’t be angry with me, please don’t bust my kneecaps, I love what you’re doing, keep it up! I’m not trying to get rid of you, I’m trying to make this game more transparent / understandable and fun for everyone. When I’m successful, no longer will you have to resort to ripping off poor amateurs….no, the wealth of the players will rise, the market will become more liquid and volatile and your fees will only go higher! So c’mon, do your jobs, I’ll do mine, together we can take this sport mainstream!
Posted in DVD, Manipulation, Patterns To Avoid