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