As I alerted TIMalert subscribers yesterday, I shorted 2500 CPY at $3.31, a stock up 330% off its lows in the past 2 weeks for these 10 reasons:
1. The stock surged off its $1 lows on optimism over a renewed Sears contract, they got it now and there were no buyers, stock finished up big on the day (2 days ago) only due to late day/low volume short squeeze/typo…buy the rumor, sell the news
2. The Sears renewal is gonna cost CPY, a company with only $8 mil in the bank going into the holiday season an extra $6 million they didn’t plan on…325,000 shares given to Sears, which I’m sure will be dumped onto the market first chance Sears gets…read the SEC filing that the vast majority of people are too lazy to read…FAILING COMPANIES MAKE TOXIC DEALS JUST TO STAY ALIVE FOR THE TIME BEING…CPY is Sears’ bitch
3. CPY which has sooo little cash and yet they pay out $4mil/year in dividends…lots of people are buying based on its high dividend, methinks they cut it early next year…if you listen to their conference call, CEO even says they need to talk about it…no way will I be around for the answer but if they do cut, it’s a 20% drop in stock price…typically…good news is the anticipation of that can create sellers sooner rather than later
4. Premium photos are a luxury that most people won’t spend much on if they’re poor, which they’re gonna be in 2009…CPY has very little cash and $100+ million debt, no way do they do well anytime soon, this is like SIX all over again, double digits to pennies.
5. No way will I be around for pennies, but if/when it cracks $2.90ish, this thing has no support whatsoever until $2…methinks I can cover in the mid $2s in the next 1-2 weeks.
6. People will be looking for January effect rally, methinks its already happened and the fading volume—which has already begun over the past 2-3 days—will only get worse and create an avalanche of sellers, not that its gonna take much to make this thing collapse.
7. This thing is EXACTLY like MECA, a stock that I also shorted on its spike, but covered waaaay too early….Timmay’s learning a bit of patience, let’s see if it pays off….look at MECA’s chart and see what I think CPY will soon be:
8. Yes, if I followed the rules in my PennyStocking DVD, I’d have waited to short until it cracked $2.90, but shares to short are hard to come by so I had to take a chance…good news is sellers are getting more entrenched every hour, big sell orders overhead mean there are severe obstacles for any rise
9. CPY is probly gonna get delisted by the NYSE very sooon, that’s an easy 10-20% off the day of that PR
10. Any PR from stemming from any of these negative variables will knock it below support and then it can really fall off a cliff…risk is it doesn’t and I cut losses quick or get bored…risk of 20-30 cents upside, $1 of downside, I like my odds, welcome to meticulous trading aka PennyStocking.
Tags: Breakdowns, Short Selling
