Shorting Into Penny Stock Manipulation Works Wonders But The SEC Still Owes Me $500

Going into today, as I posted pre-market, I thoroughly expected to short LGDI because it had all the right elements—junky company, big run-up, toxic SEC filings and new today no less than 12 paid-for stock promotion pieces! (somebody’s paying biiiig $ for those)

So, I reserved 1,000 shares to short for the day. Been working myself dizzy lately so I looked forward to taking an early morning nap, but when this thing shot up from $4 to $4.75 before 9:45am—or a $140 million increase n top of its already thoroughly ridiculous $700 million marketcap—I couldn’t help but want to bet against it, excitably shorting 1,000 shares just off its highs at $4.62.

I know, I know, in my PennyStocking DVD, I preach again and again how important it is to wait until the afternoon to fade these suckers, but I am a trading addict so there’s really little hope for me. The good news is I’m an experienced addict so I never overdose—as undisciplined as this short was, it was a small position. Just as the stock jumped to $5 and I felt sick to my stomach for blowing yet another trade, I didn’t panic, instead reserving another 1,000 shares to short to get my average price up.

Since the chart’s already gone Supernova, I knew—yes I knew—the end, or at least a pause / slight reversal, would develop either today or tomorrow. That’s the beautiful thing about these plays—you don’t have to be perfect to profit, far from it, you just gotta get close and understand what’s goin’ on—and sure enough within an hour, after the volume faded big-time (meaning the hype fro the paid-for news releases had worn off) and it double–topped at $5, the tank was on so I added 500 shares—playing it conservatively—at $4.78 to get my average cost up to $4.67.

Sellers swarmed the few buyers and just after 11am, I covered at $4.42, taking $353 in profits, after $27 commissions, back to a 50% return since I started TIM last November. Read the comments in THIS post and see my readers timed it even better, taking home 30-50 cents/share in profits instead of my measly 25.

So why did we all cover so quickly? Simple: the big $ is in the gradual fades that become panics, this was just my shot at going for a quick reversal off a morning spike. Even though waaaay off in my entry, I still profited 5% in an hour, taking profits cuz the stock was still waaay up on the day aka not about to go negative anytime soon—meaning the big fade possibility was slim to none. Tomorrow is an even greater chance of a big fade…to make it happen, can ya guess what the key price that needs to crack is?

I wanted to do the exact same type of “fade the morning spike” play with SUNV at $1.50—of which I reserved 2,000 shares to short—but since the profit potential wasn’t as great (15-30 cents/share) and I couldn’t risk the absurd pattern day trader rule getting in the way of my probable LGDI short tomorrow, I didn’t play anything else. SUNV ended up tanking 30 cents, which means I’m adding $500 to the tab the SEC owes me—and the millions more they discriminate against—in missed earnings. Oh, I will sue them eventually, you can count on that!

I gotta go take a nap, book winners, yup, with an S will be announced tomorrow morning

Posted in Breakdowns, Good Trades, Manipulation, Pattern Day Trader Rule, Patterns To Short, Short Selling

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  • Nodin

    I tried so hard to get some shares of LGDI to short but IB had nothing…nothing….I’ll have to wake up early tomorrow to try to snatch a few (i’m on pacific time).
    any thoughts on PKT???? It’s had three up days and it’s up like 40% on nothing…any thoughts??

  • Nodin

    I tried so hard to get some shares of LGDI to short but IB had nothing…nothing….I’ll have to wake up early tomorrow to try to snatch a few (i’m on pacific time).
    any thoughts on PKT???? It’s had three up days and it’s up like 40% on nothing…any thoughts??

  • http://www.gabrielchung.com GabeC

    PKT looks like a great short tomorrow or next couple of days, high vol, no news, even some good resistance on a 5yr chart.

  • http://www.gabrielchung.com GabeC

    PKT looks like a great short tomorrow or next couple of days, high vol, no news, even some good resistance on a 5yr chart.

  • JensGould

    Hey Tim I got an OTCBB question for ya. I’ll post it in the forums as well. Because OTCBB orders take a while to get filled, people, not familiar with otcbb’s, chase the bid and ask prices when they’re trying to enter/exit positions. So, when a stock gets near potential support/resistance levels how do you know for sure the stock has actually broken down/out and its not someone franticly trying to get in/out? Just based on the number of shares traded? Just gotta wait it out?

  • JensGould

    Hey Tim I got an OTCBB question for ya. I’ll post it in the forums as well. Because OTCBB orders take a while to get filled, people, not familiar with otcbb’s, chase the bid and ask prices when they’re trying to enter/exit positions. So, when a stock gets near potential support/resistance levels how do you know for sure the stock has actually broken down/out and its not someone franticly trying to get in/out? Just based on the number of shares traded? Just gotta wait it out?

  • getshorty

    I am also annoyed about the patern day trading rule, Have you ever looked at canadian pump and dumps? no PDT rule this side of the border.

    I have been looking for % gainers on finance yahoo canada, but not much, at least not with decent volume (look like dead traps)

    Have you looked at this option?

  • getshorty

    I am also annoyed about the patern day trading rule, Have you ever looked at canadian pump and dumps? no PDT rule this side of the border.

    I have been looking for % gainers on finance yahoo canada, but not much, at least not with decent volume (look like dead traps)

    Have you looked at this option?

  • jdubyawolfe

    How does one go about reserving shares to short. Can you do this in advance, or do you have to wait until the day of. How early does one need to call to ‘reserve’ shares? Many thanks

  • jdubyawolfe

    How does one go about reserving shares to short. Can you do this in advance, or do you have to wait until the day of. How early does one need to call to ‘reserve’ shares? Many thanks

  • GS

    AHAHA, Tim did you read that lil bitch crainiac’s comments on “The Lion”? …” I wish…”.
    Someone ought to bitch slap the bitch out of his sorry pumper ass.

  • GS

    AHAHA, Tim did you read that lil bitch crainiac’s comments on “The Lion”? …” I wish…”.
    Someone ought to bitch slap the bitch out of his sorry pumper ass.

  • jj

    how does yahoo ony close 15% down? that’s crap….just a few more dollars down and i’d be reading my 2nd signed copy of your book!

  • jj

    how does yahoo ony close 15% down? that’s crap….just a few more dollars down and i’d be reading my 2nd signed copy of your book!

  • http://www.getflashmedia.com ivegotstylekid

    hell of a gain today tim. Can’t believe yahoo didn’t drop more, I remember the morning of the msft bid it went from 18 to around 30, the pull out and it drop 4 bucks? O well, I’m looking forward to another chance at the graphed book

  • http://www.getflashmedia.com ivegotstylekid

    hell of a gain today tim. Can’t believe yahoo didn’t drop more, I remember the morning of the msft bid it went from 18 to around 30, the pull out and it drop 4 bucks? O well, I’m looking forward to another chance at the graphed book

  • jj

    tim do you ever average up when the stock price contiues higher like it did today and you know it’s going going to take a turn or do you just let it play out and keep your risk down?

  • jj

    tim do you ever average up when the stock price contiues higher like it did today and you know it’s going going to take a turn or do you just let it play out and keep your risk down?

  • http://www.timothysykes.com timothysykes

    before this ridiculous p attern day trader rule limited my trading, i’d always take small positions and scale in and out

  • http://www.timothysykes.com timothysykes

    before this ridiculous p attern day trader rule limited my trading, i’d always take small positions and scale in and out

  • jj

    that won’t hinder you when you’re over 25k right?

  • jj

    that won’t hinder you when you’re over 25k right?

  • getshorty

    So, how about looking at canadian pumps and dumps, no pattern day trading rule on this ones, can trade as much as you like.

  • getshorty

    So, how about looking at canadian pumps and dumps, no pattern day trading rule on this ones, can trade as much as you like.

  • http://www.timothysykes.com timothysykes

    25k, probly more like 30k cuz i’ll still need a cushion and i’ll be free, but for now, i want to bring as much attention to this as possible

    never traded in canada, i stick with what i know, where all my experience is..unlike most traders, the game isnt just about profits for me, its about teaching others whats worked for me

  • http://www.timothysykes.com timothysykes

    25k, probly more like 30k cuz i’ll still need a cushion and i’ll be free, but for now, i want to bring as much attention to this as possible

    never traded in canada, i stick with what i know, where all my experience is..unlike most traders, the game isnt just about profits for me, its about teaching others whats worked for me

  • John

    That damn Pattern Day Trade rule totally screws people over.

    Why the hell does it exist, just to “protect” noobies from losing all their money in commissions?

    More like screw people out of good trades=(

  • John

    That damn Pattern Day Trade rule totally screws people over.

    Why the hell does it exist, just to “protect” noobies from losing all their money in commissions?

    More like screw people out of good trades=(

  • http://www.getflashmedia.com ivegotstylekid

    just like the online poker ban protecting idiots rather than people with a skill, that need the source of income

  • http://www.getflashmedia.com ivegotstylekid

    just like the online poker ban protecting idiots rather than people with a skill, that need the source of income

  • http://www.christophercianci.com Christopher Cianci

    We are lucky to have people like Tim to help everyone out. I would still be reading Cramer books if not for this site haha.

  • http://www.christophercianci.com Christopher Cianci

    We are lucky to have people like Tim to help everyone out. I would still be reading Cramer books if not for this site haha.

  • be-the-ball

    Tim,

    PKT? Not up enough yet but has potential

  • be-the-ball

    Tim,

    PKT? Not up enough yet but has potential

  • be-the-ball

    Also NLS?

  • be-the-ball

    Also NLS?

  • jj

    just imagine if the casino’s in vegas were regulated by the SEC. they’d be bankrupt…actually the river boat casino’s in KS/MO are like that…in fact they’ll even kick you out if show signs of intoxication…i just don’t get…the Pattern day trading rule is total BS…we can thank the legal system for these stupid regulations and dumb asses than take responsibilty for their own bad actions.

  • jj

    just imagine if the casino’s in vegas were regulated by the SEC. they’d be bankrupt…actually the river boat casino’s in KS/MO are like that…in fact they’ll even kick you out if show signs of intoxication…i just don’t get…the Pattern day trading rule is total BS…we can thank the legal system for these stupid regulations and dumb asses than take responsibilty for their own bad actions.

  • jj

    hey if anyone knows ViciousChicken…here’s a good avatar…[img]http://img68.exs.cx/img68/822/emu.jpg[/img]

  • jj

    hey if anyone knows ViciousChicken…here’s a good avatar…[img]http://img68.exs.cx/img68/822/emu.jpg[/img]

  • Juker

    2 comments:

    1) TOS looks like an interesting platform but $27 commission is HUGE. IB’s commission would be $10 — not great, but better. Others are lower still, I think.

    2) Surely you have >$25K in your account and therefore NOT subject to Pattern Day Trader rules?

  • Juker

    2 comments:

    1) TOS looks like an interesting platform but $27 commission is HUGE. IB’s commission would be $10 — not great, but better. Others are lower still, I think.

    2) Surely you have >$25K in your account and therefore NOT subject to Pattern Day Trader rules?

  • http://www.getflashmedia.com ivegotstylekid

    that chicken picture is wild, looks like it even has a cavity

  • http://www.getflashmedia.com ivegotstylekid

    that chicken picture is wild, looks like it even has a cavity

  • http://www.timothysykes.com timothysykes

    $27 commissions were on 3 trades–and if u think thats huge u shouldnt be trading penny stocks cuz its a drop in the bucket for being able to find shares in the first place! its always amazing to me how cheap people are when it comes to fees and commissions so they miss out on trades where they can make 100 to 1,000 times what those stupid costs are.

  • http://www.timothysykes.com timothysykes

    $27 commissions were on 3 trades–and if u think thats huge u shouldnt be trading penny stocks cuz its a drop in the bucket for being able to find shares in the first place! its always amazing to me how cheap people are when it comes to fees and commissions so they miss out on trades where they can make 100 to 1,000 times what those stupid costs are.

  • burky

    No shares to borrow of LGDI at TOS. Sykes did you get any already?

  • burky

    No shares to borrow of LGDI at TOS. Sykes did you get any already?

  • http://www.timothysykes.com timothysykes

    got IMs from at least 5 people with borrowed LGDI shares, early bird gets the worm…I got 2k

  • http://www.timothysykes.com timothysykes

    got IMs from at least 5 people with borrowed LGDI shares, early bird gets the worm…I got 2k

  • jj

    tim-that needs to be one of your lessons or basics for trading penny stocks…don’t be cheap on fees when the broker actually provides something. one thing is for sure with TOS is that they’re great in all aspects. anyone who’s used or downloaded their desktop trading platform will see they get a lot of features. it rivals any of the other ones I’ve seen out there.

  • jj

    tim-that needs to be one of your lessons or basics for trading penny stocks…don’t be cheap on fees when the broker actually provides something. one thing is for sure with TOS is that they’re great in all aspects. anyone who’s used or downloaded their desktop trading platform will see they get a lot of features. it rivals any of the other ones I’ve seen out there.

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  • jj

    #22 – the picture is of an emu. it does look like some dental work had been done. i had to post it when i saw the screen-name “vicious chicken”.

  • jj

    #22 – the picture is of an emu. it does look like some dental work had been done. i had to post it when i saw the screen-name “vicious chicken”.

  • Bubba Say On Commissions

    We all got to make a living. If you’re worried about commissions, find the least expensive broker you can find. When you ain’t satisfied with that broker anymore, find another broker who may charge you more, but treat you better. Who here thinks Tim is worried about commissions? Bubba believes Tim thinks about it, but likes his broker.

    Just think, there was a time not long ago when trading 100 shr of $30 stock would cost >$50-$75. Can anyone say ‘retail?’

  • Bubba Say On Commissions

    We all got to make a living. If you’re worried about commissions, find the least expensive broker you can find. When you ain’t satisfied with that broker anymore, find another broker who may charge you more, but treat you better. Who here thinks Tim is worried about commissions? Bubba believes Tim thinks about it, but likes his broker.

    Just think, there was a time not long ago when trading 100 shr of $30 stock would cost >$50-$75. Can anyone say ‘retail?’

  • http://www.timothysykes.com timothysykes

    yah commissions and fees are neglible, ask davey, he paid like $30-$40 commission on VRML and made $3,500! if he’d tried to go with scottrade or zecco who had no shares to short, he wouldnt be in the trade in the first place

  • http://www.timothysykes.com timothysykes

    yah commissions and fees are neglible, ask davey, he paid like $30-$40 commission on VRML and made $3,500! if he’d tried to go with scottrade or zecco who had no shares to short, he wouldnt be in the trade in the first place

  • Ineedmoney

    What do you think of another go at PDO? It closed flat today with big sells coming in the last hour.

  • Ineedmoney

    What do you think of another go at PDO? It closed flat today with big sells coming in the last hour.

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  • rod

    I am not with you on your call on Legend international- they have 700 bucks in debt and about 115k in cash, ya not alot but they are way better off than most mining companies as they can take their phos. property into production fairly quickly unlike other types of mines.

    I think they are or could be overvalued but it may be because they are playing by US standards of reporting mineral reserves, with the canadian standards, the 43-101, investors can see the progression of the mineral base moving up the chain to feasability, unlike the US where they cannot report indicated or inferred just proven and probable reserves.

  • rod

    I am not with you on your call on Legend international- they have 700 bucks in debt and about 115k in cash, ya not alot but they are way better off than most mining companies as they can take their phos. property into production fairly quickly unlike other types of mines.

    I think they are or could be overvalued but it may be because they are playing by US standards of reporting mineral reserves, with the canadian standards, the 43-101, investors can see the progression of the mineral base moving up the chain to feasability, unlike the US where they cannot report indicated or inferred just proven and probable reserves.

  • http://www.timothysykes.com Anonymous

    Haha look how this pump played out

  • Anonymous

    how do you short stocks that cheap? Every time i do ETrade doesn’t let me. It’s very frustrating!