TIM $16,006, Up $318, Bad Entry, Pathetic Exit, Decent Profit, Welcome To My Life
How can anyone want to buy a crap stock—with thousands of bitter shareholders who bought in at much higher prices now looking to sell on any bounce—that’s tripled over the past 2 days without any news and now has fading volume? OK, some people will—maybe they “know something”—but the odds are definitely against them. There’s simply too much overhead resistance, and that usually crushes the price within days. Kinda like a midget trying to hold up a basketball player for very long:
As I’ve posted for the past two days here and here (scroll down to the bottom of both posts) Dara Biosciences (DARA) exemplified this tired midget pattern. Well, DARA the midget has actually been stronger than many short sellers, including me, expected—good thing I couldn’t find any shares to short until today when I reserved 1,000 shares to short. The morning spikes are caused by those early short sellers getting squeeeeezed.
I wanted to short immediately at $4.90 because I thought this stock fades to $4-ish in a few days, but I knew I had to wait due to the probable morning spike. All pre-market long it rose 50 cents or so—on some fluffy new director news—and I waited…but the selling was constant that I was compelled to show off my impatience/undiscipline by shorting 917 shares at $5.35. Whoops, right after I shorted, a 5,000 buy block came in and stayed there for 20 minutes. Stupid early short! Luckily, Thinkorswim had more shares to dole out so I borrowed another 600 shares and decided to add on the way up, if need be. Need be there was as the stock spiked to $5.80ish right near the open—as I cursed my early entry—but I didn’t want to add until over $6 to get my average price really up.
When the basketball player-size big block sellers swarmed $5.60, $5.65, $5.70 and $5.75, I, along with other short sellers and lots of hesitant buyers knew the run was over. I added 500 shares to my short at $5.53—making my 1,417 shares short at an average of $5.42 a ridiculous 50% of total TIM assets—and watched as the midget buyers collapsed, all the way to $5 within three minutes. (C’mon, how perfect is this analogy?!?!)
It bounced a little, but I wanted a crack of $5 so I held, and felt encouraged when some big block buyer at $5.30 got taken out quickly by the sellers. But only a few minutes later, some big block buyers came in at $5.05 and $5.10 and I said screw it—I shouldn’t be in this thing during the morning anyway—buying to cover at $5.15. Profit of $318. TIM over $16k, another all-time high. So what, this was a true panic exit. Pathetic. Disgusting. Amateur. Bush league. Call it what you will, you’d be right. After I bought, the big block buyers disappeared, proving some short sellers placed fake orders to scare up some buying for them to short into and add to their positions. Gotta love those games.
No matter that I had a ton of other stuff to do, and no buying power/day trades left, I forced myself to keep watching as a kind of punishment for being so quick to exit such a perfect pattern. Within 30 minutes, it did crack $5 and my profit coulda woulda shoulda doubled. It’s a shame, I entered and exited poorly and yet I still made 5%…ahhhhh PennyStocking (Damn right I’m gonna link it in every post, I love it , but as you can see I’m barely scratching the surface here, somebody’s gotta be able to do it better, right?)
Despite the down market, daring DARA has managed to hold onto $4.90 and stay positive, albeit slightly, on the day…not sure how much longer it holds. Hopefully this midget can find one last surge of energy to confound the shorts and spike its stock price into tomorrow (odds are against it, remember, DARA’s little midget arms, aka buyers, are getting verrrrry tired) because I have meetings and won’t be able to trade the rest of the day. (Yup, trading this little $16,000 account isn’t my primary source of income. Shocking, I know! Although just under $2k in earnings this month ain’t too shabby)
Posted in Analogies, DVD, Good Trades, Patterns To Short, Short Selling, Supernovas