TIM $15,828 Up $243, One Bad Trade, One Perfect Trade
Today I focused all my time and energy on the two hottest microcaps, COIN and SHZ. As I detailed in this post, I screwed up COIN royally. Typical of a morning short sale. Considering the $12.40 closing price, my $13.50 entry price turned out to be pretty good—if I coulda woulda shoulda endured a little pain first—but since I always cut my losses quickly that was never really an option. And not cutting my losses quickly was out of the question.
After the failure to hold the breakout at $14, the ideal afternoon trade became shorting right at that $13.50 level because as you can see in the intraday chart, while holding that price sparked the morning surge, the failure to hold it in the afternoon—not once but twice—sparked a further sell off. Another ideal entry would be when the stock went negative on the day at $13.
TIM Lesson: You can prepare ahead of time all the key price levels you want, but you gotta wait and see how the stock acts around them before trading.
TIM Lesson: Get this through your stupid little Jew head: don’t short in the morning, too much risk of morning spikeness, wait for the chart to become more gradual as happens in the afternoon.
Like I said last night, SHZ is a much easier PennyStocking play. Its chart is a true Supernova. Thanks to two consecutive 50% up days—up from $4 on no news—c’mon how can the odds not favor the stock retreating, at least a little? Sure, there’s the risk of a third day short squeeze, but if you wail until all the morning spikeness is done with, that risk drops dramatically.
TIM Lesson: Shorting into big fluff winners on the 3rd or 4th day is ideal, especially when they’re just down a little bit, meaning the issue (of a big move one way or the other) is still in doubt.
Now, let me just say, this is one of the most perfect stock trades I’ve ever executed. Forget about the small dollar gain–$358 is a good day’s pay you snobby Wall Street bastards—and focus on the setup, thesis and execution.
When I began looking to short at $8.44 around noon, I was thinking it could really fall of a cliff, all the way to the $6 or $7 range. But it had to crack the intraday sideways price action between $8.40 and $8.75 first or else risk an afternoon spike, as happened yesterday, and considering a big 10,000 share buy block at $8.35, and the stock’s pathetic daily volume of 150,000ish shares, that wouldn’t be easy.
So, I waited.
Around 1:30pm, a 5,000ish share block knocked out half the big buy order and there it continued to sit for a tense 20 minutes—I wanted to short but only if it took that big guy out. A big 10,000 share sell order came in at $8.59 and then several smaller orders came in underneath. I felt protected against a big spike and shorted 500 shares at $8.43.
Less than ten minutes later, some of those big sell orders rained down on that now injured big buy order at $8.35, quickly taking it out and then the stock really did fall off a cliff. It took out the few remaining buys at $8, then $7.80. 60 cent gain, nope, I was determined to hold overnight. The stock bounced to $8, but big sell orders there protected me (even though I had my hand on my mouse in case they started to get takne out). Within 10 more minutes there was another leg down, but bids in the $7.70 range were tough to get taken out, even though they only showed 100 and 200 shares. Big buyers were cloaking their big orders. Typical short sellers covering, definitely rich dudes. $7.70 got taken out with a bit of a fight and when some big sell orders couldn’t take out $7.67 I said screw it, covering my shares into an obvious market order at $7.68
It was a perfect cover. The spread between the bid and ask was its same ridiculous self and the stock bounced all the way back to $8.20, even though the bid lagged around $7.80-$7.90. After the bounce, the stock closed near its lows, but I’d made, 75 cents/share or 9%, in 40 minutes. The setup, my thesis and execution were all perfect. The perfect blossom. All perfect.
$7.60 is now 2-day support, so I’ll look to short into that tomorrow because I think it’s gonna go under $7 and maybe even $6, at least temporarily, but I’ll be extra careful because even though the stock is still up $3.50 off its lows, it’s already $2 off its highs.
And there’s another micro momo runner in Dara Biosciences (DARA), up 80% ont eh day, hopefully it can squeeze some early shorts and make it a multi-day SHZ-like play.
PS TIM, another all-time high now, up 12% on the month, I’m getting used to being poor again, so much more fun to be the underdog!
Tags: DVD, Patience, Patterns To Short, Short Selling, Supernovas, TIM Lessons
