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Why I Just Shorted A Sleepy Company Called Zynex Inc. (ZYXI)

Posted by timothysykes on Mon 21st of Jul, 2008 02:25:23 PM

So much for Thinkorswim disallowing the shorting of OTCBB stocks as I reserved 2,000 shares of ZYXI to short early this morning (latecomers got no shares as TIMalert subscribers grabbed the all borrowable shares…

Given that its chart was eerily similar to similarly crappy company UBHI, which dropped nicely off its highs, I tried shorting into the morning panic around $3.30, but discovered my Thinkorswim rep had mistakenly inputted 200 shares instead of 2,000 shares into my account so I had to login to their handy chat program and fix that mistake. Unfortunately, morning panics are quick so by the time we got that straightened out, the stock had tanked all the way to the $2.90 area…bastards…but manual ‘fat finger’ mistakes do happen, you just gotta accept it…

Luckily, there’s been a decent bounce so far, so as I alerts TIMalert peeps, I shorted 1,000 shares at $3.18, the goal being to cover in the $2.75 area, either later today (wishful thinking) or into a morning drop tomorrow–or even Wednesday or Thursday–considering this is a half position (I purposely used only 1,000 out of 2,000 cuz shorting late morning into a rebound is not an ideal chart pattern for me).

So what’s the situation now? Well, I researched it thoroughly last night (as I do all the companies on my morning watchlists) so I know that while they’ve been having typically sugarcoated press releases talking about growing revenue/profits, their monthly updates in April, May and June were met with no buying power…only after this early July PR that they’re changing their corporate name in the hopes of going AMEX has their stock spiked 50%+. (Listen, name changes are done only by the worst companies who are embarrassed of their past…CEO says it simplifies things my arse! Why would anyone want to go through 5000 hours of additional paperwork, there’s a definite stench of some kind here)

Normally, I’m hesitant to short fundamentally sound companies, but this is one sleepy mofo whose business/industry–pain management/electrotherapy–ain’t goin’ anywhere fast, so methinks this spike retraces below $3–just as it did this morning–support being at $2.85ish and $2.60ish…volume has already begun to fade, so if this closes down on the day, it’s the first down day pattern we all know and love…for reference, see the chart below of how similar spiker Hydrogenics Corporation (USA) (HYGS) performed after it had the same kind of morning panic and slight rebound throughout the day (usually a momentum killer, signs that a gradual fade will play out over the next few days):

first red day1 Why I Just Shorted A Sleepy Company Called Zynex Inc. (ZYXI)

hygs1 Why I Just Shorted A Sleepy Company Called Zynex Inc. (ZYXI)

UPDATE: Just tried to break above $3.20, ran into wall, very good sign it will close red today making me a happy TIMMAYYY!

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  • Alex
    Most recent analyst says OSTK will go to $20, but like Tim says, don't trust 'em.
  • Alex
    Shorty, I always say "could", never "will"
    I doubt it will go to $10 but it could happen. The earnings forecast was lacking clarity...they said something like 10% chance of a loss for the second half, about 80% chance they do .17 to .30 EPS and 10% chance of better than that. So I would never do OSTK as a long-term investment, short or long...it's pretty much a gamble. It seems pretty well-managed, but still, retail is finicky. I'll just stick with daytrading it when the volatility is what it is now, with 10-20% swings.
  • getshorty
    I don't get you alex, Friday you told me OSTK would close at $ 20, now you are telling me it is going to $ 10 ?
  • getshorty
    hahahahahaha, you are gonna get me fired Yngvai, i had to come up with something for justifying my laugh here.
  • YngvaiMalmsteve
    My fiance' is about 5'2". That's the only naked short I've ever done
  • Alex
    Shorty - good short for you on OSTK today - could be a good long-term short, also - maybe it will test the sub-$10 lows again. Also, it might stay in play for daytrades for a couple more days. Volume was awesome again today.

    BBX was going gonzo this afternoon, didn't play it, though (but it probably could have given a whole bunch of scalps for .05 or .10) - putting it on watch tomorrow to see if it breaks out or gets dumped.
  • getshorty
    I am not sure who have been able to naked short, I mean, I'd really love to be able to nake short, that way I would't have to wake up at 4:00 am to try to borrow shares.

    The closest that I have been to nake short has been short naked when an alarm went off and run out of the shower to short the stock.
  • YngvaiMalmsteve
    Yeah, none of us should be getting our panties in a wad about this. This is all about cracking down on NAKED short selling.
  • younggunz
    so the original restriction was to not be able to short stocks unless you pre-borrowed them? I thought naked shorting was illegal in the first place. Now they're going to extend the rule to more then the original 19 banks? What is the rule actually restricting if it is still allowing investors to short if the pre-borrow. Last I check any online broker makes sure to pre-borrow a stock before they let you short it.
  • Fantom
    Tim this is some bullshit

    http://www.cnbc.com/id/25787852
  • YngvaiMalmsteve
    Only 100 shares were left. I took them. I'm short at $9.45.
  • getshorty
    Yngvai, I agree, shorted 400 shares of WSCI at 9.66, did u get any?
  • Zoltran
    xeiA I hope you are joking about GBITQ.
  • xelA
    Might i ask about GBITQ its price movement seems predictable enough...
  • Fantom
    uaua I had a nice entry point at 5.44 only 400 shares though,
    they report negative earnings tomorrow.

    I keep changing my cover price the more it sank. I know, its something about danger. Plus I already used 1 day trade this week.

    I will cover in the morning.

    On to the next victim.
  • YngvaiMalmsteve
    WSCI is also on 1st down day
  • Learning
    GGR- looks like first down day
  • Fantom
    Visa long
    pdo long
    uaua short
  • Fantom
    The Darkside of the TimEmpire;

    Ah this game just keeps getting better. I learn every week, thanks to the knowledge that you guys bring to the table. Thanks, its enough for all of us to eat.

    Newbies...welcome to the darkside.
  • getshorty
    OSTK looks like a hammer today, maybe a reversal. HOwever, I still don't see any support until $15. Shorted 200 shares at 15.59 for a quick trade, not planning to hold this beast
  • TommyTim
    I see ZYXI more similar to IDAE than HYGS. HYGS was a pump n dump based on high oil prices. It also was doing 10 million shares at its peak. ZYXI has only exceeded 400K 3 times in the last month. Todays big drop was caused by a large sell order. Look at the quick recovery. This is what I call a naked stock where it could go either way or just sit still. They are also seeking an application to trade in the AMEX.
  • Reaper
    MWY up on Lebed pump today. Would need to go another 30% higher tomorrow to interest me as a short.
  • getshorty
    Good timing Alex, thanks good you didn't hold to the OSTK shares you bought at 16.90 on friday !!

    On Friday I Closed my shares at 16.45 for a shy $60 gain, Looked like an unpredictable open for monday, I would have made a few hundres bucks, but it would have been just pure luck.

    Keep on bringing the picks, peix looks like a decent short, will keep an eye on it
  • Alex
    Tim - just made the observation that PEIX was nice pennystock short today
  • younggunz
    Yeah, i couldn't get any shares either. I asked about 30 mins before the open to reserve and got shot down. asked for the short after tims alert got a no. asked again about 20 mins ago and another no. I may try again near the close if the volume moves. Who knows maybe I can get in on a good breakdown before the close.
  • Alex
    Shorty - finally caught the OSTK short squeeze today - tried it this morning and lost .30, but then rode it from 13.85 to 16.20 - third times a charm!
  • getshorty
    Shorted 400 shares of ALTH at 8.87 since it couldn;t stay over $ 9 (tight stop on place though)

    Shorted 400 shares of wsci, this one has been dancing around all morning, considering closing the position and reopening on proven weakness.

    Had ZYXi, couldn't get any today, woke up at 6:00 am here (9:00 am eastern time) so now worms for this late bird.
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