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How One Of My Greatest Students, Made $17,000+ Last Week To Bring His Cumulative TIM Profits To $70,000+

May 18, 2009 at 2:33 pm
by Timothy Sykes

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His name is Michael Goode & THIS is his entire post…

For the sake of brevity, I’ll repost the most relevant parts/pics of that blog post so you can better understand how Michael, one of the few TIMalerts lifetime subscribers (learn more HERE and contact me if you’re interested), is up $70,000+ in the past few months using my strategy…the guy’s even put together a nice chart illustrating it:

And then to this chart illustrating his $17,000+ profit by way of short selling smack dab into the suckers buying ALAN based on Stock Preacher’s pump and dump email “newsletter” (it’s not a financial newsletter, it’s a financial tumor! (With an Arrrrrrnold Schwarnznegger voice)

…which he has perfected thanks to his numerous viewings of my instructional DVDs and his rather respectable intelligence (for someone who trades penny stocks…remember, the manipulators and the suckers have the intellect of a retarded ant)

Here’s Michaellllll (okay you get the full post because it’s a really good one!):

A lot can be said about short sellers. One undeniable fact is that short sellers are the sellers of last resort. When everyone else wants to buy, the only ones who wish to sell are often short sellers. In fact, while many fear the depredations of short sellers manipulating the market with bear raids (of which there is little evidence), short sellers are the ones who protect the market from pump & dump schemes and bull raids (a bull raid being a concerted promotion of a stock when the promoter is not being compensated and has no position in the stock; certain stock pumpers will engage in these from time to time to enhance their credibility). It is worth noting that pump & dump schemes are common in OTC and Pinksheets stocks that usually trade for less than a dime per share, but there are almost none in higher-priced listed stocks. The reason for this is that margin rules and difficulties borrowing shares to short prevent short sellers from being the sellers of last resort for penny stocks. For listed securities they are more easily able to sell. It is the fear of short sellers that causes most stock pumpers to avoid stocks trading for over $1 per share on exchanges like the NYSE and Nasdaq.

Sometimes pumpers get a little cocky or a short seller gets lucky and a pump & dump runs headlong into the brick wall that is a motivated and well-funded short seller. Whatever the reason, this short seller was able to find plenty of shares to borrow of last Thursday’s pump of Alanco Technologies (ALAN). This pump (or in this case a bull raid, as the pumper reported having received no money to promote the company) came from stock tout Stockpreacher (about which I have written previously). Stockpreacher released its ‘report’ on the company just as the market opened and ALAN jumped 100% from an opening price of $0.49 to over $1.00 in less than a minute (this was no doubt caused by Stockpreacher’s idiot subscribers buying with market orders). The stock touched a high of $1.30 but very few shares traded hands above $1.05.

Seeing that the stock was up an insane amount for no reason other than a bull raid and that there were shares available to short, I quickly started selling large blocks of shares. I knew that the only reason the stock was up was a bull raid and I knew from past experience that previous Stockpreacher bull raids dropped quickly from their highs. I quickly exhausted all 12,550 shares of ALAN available to short at my main brokerage, Interactive Brokers (see a screen shot of my trades there). I then moved on to another brokerage account that had shares available and sold short another 34,500 shares. I had an average short price of $1.01. My fusillade of short sales (I sold over 2% of that day’s volume in the span of a couple minutes) helped to keep the stock from hitting more outrageous highs than the already outrageous $1.30 it briefly hit. How do I know? Stockpreacher’s bull raid on BOSC from the previous week (for which no shares were available to short at any of my four brokerages) had driven the stock price from $0.60 to an intra-day high of $5.80.

About an hour and fifteen minutes after I first sold short, I covered my short position at prices between $0.60 and $0.65. I netted $17,322 for a few minutes’ work and I got the satisfaction of helping to counter the manipulation of a notorious stock tout. It was indeed a good day.

How You Can Profit from Pump & Dumps

Some fellow stock traders were impressed with my courage in short selling a stock that was up 100% on manipulation without even waiting for the buying pressure to ease up. My response was simple: manipulation has its limits. I am now nearly an expert on manipulation and hype, having learned from Tim Sykes how to short sell manipulated stocks. I knew from observing the previous Stockpreacher bull raids that the stocks always dropped quickly from their intraday highs. There are no easier trades than short selling a stock that has been manipulated 100% higher when you know the manipulation is going to cease (Stockpreacher does not keep pumping the stocks it selects for bull raids after the initial day). That being said, it is scary to quickly take a large short position in a volatile stock. To do so requires both understanding hype and manipulation and confidence in being right. Unfortunately, until the last couple weeks (during which I have made several great trades), my confidence has been poor (like my trading) this year.

As I have mentioned repeatedly in my articles on becoming a stock trader (Part 1, Part 2) and in my Introduction to Evidence-Based Investing, the bane of any trader (or investor) is emotion. Fear and greed are both anathema to successful trading; a trader should be confident but not overconfident. Trading involves implementation of a specific plan; emotion will distract from the plan and lead to poor decisions. I have struggled with my trading this year, suffering from a large draw-down in my secret super-awesome trading strategy, suffering from meager profits in my pennystocking trading strategy (Tim Sykes’ strategy), and even messing up my arbitrage trades.

As a result of the above troubles, my account dipped into negative territory and I was feeling horrible. While I gained 5.13% in January and gained 5.32% in February, I lost 3.81% in March and lost 9.90% in April. I resolved to dial down my risk a bit and focus on fixing my trading errors. I revised my super-secret trading strategy (which had been responsible for 80% of my profits and losses) in a way that only slightly reduces returns while greatly reducing risk. For my pennystocking trades, I focused on getting my confidence back. The best way to do that is to focus on the easiest trades. So, knowing how easy it would be to profit from short selling a Stockpreacher pump, I followed each one and did not let my fears keep me from taking a huge short position in ALAN. It helped that I follow Tim Sykes and he kept reiterating the ease of profiting from stocks up on hype alone. That strategy seems to be working as I am now up 12.14% so far this month (and May is only half-over!).

Now I have my confidence back and will look to improve my performance in more difficult trades. Of course, there is no reason for me to abandon the easiest trades! If possible, I will gladly sell short 100,000 shares of the next Stockpreacher pump!

I have previously written about Tim Sykes:

March 2008: Timothy Sykes is Full of Bullship
September 2008: Why I Paid Timothy Sykes $2000
September 2008: How to Get Rich Trading Penny Stocks
January 2009: Update on Tim Sykes’ Trading System

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  • Reaper

    Come on Tim, you should have left in some of my links–they take time and do add a lot to the post. The most important are:

    My post on how I traded previous Stockpreacher pump NTWK:http://www.goodevalue.com/2009/04/23/stockpreachercom-puts-the-pizzazz-back-in-pump-dumps/

    And my posts on how to become a stock trader:
    http://www.goodevalue.com/2009/02/02/so-you-want-to-be-a-stock-trader-part-one-of-many/
    http://www.goodevalue.com/2009/02/07/so-you-want-to-be-a-stock-trader-finding-a-trading-system-dealing-with-emotion-part-two-of-many/

    Michael Goode

  • Reaper

    Come on Tim, you should have left in some of my links–they take time and do add a lot to the post. The most important are:

    My post on how I traded previous Stockpreacher pump NTWK:http://www.goodevalue.com/2009/04/23/stockpreachercom-puts-the-pizzazz-back-in-pump-dumps/

    And my posts on how to become a stock trader:
    http://www.goodevalue.com/2009/02/02/so-you-want-to-be-a-stock-trader-part-one-of-many/
    http://www.goodevalue.com/2009/02/07/so-you-want-to-be-a-stock-trader-finding-a-trading-system-dealing-with-emotion-part-two-of-many/

    Michael Goode

  • Reaper

    Sorry, here’s the link for my post on how I traded NTWK, a previous Stockpreacher pump: http://www.goodevalue.com/2009/04/23/stockpreachercom-puts-the-pizzazz-back-in-pump-dumps/

  • Reaper

    Sorry, here’s the link for my post on how I traded NTWK, a previous Stockpreacher pump: http://www.goodevalue.com/2009/04/23/stockpreachercom-puts-the-pizzazz-back-in-pump-dumps/

  • Reaper

    And to answer the inevitable question: much of my gains came from several big trades: about $20k short selling SIL last September, about $10k short selling USS last August (all dates approximate) and $17k here on ALAN. These were the only trades where I had positions over $30k.

  • Reaper

    And to answer the inevitable question: much of my gains came from several big trades: about $20k short selling SIL last September, about $10k short selling USS last August (all dates approximate) and $17k here on ALAN. These were the only trades where I had positions over $30k.

  • http://test.timothysykes.com Timothy Sykes

    yes reaper, its the big trades that really make this strategy, the rest if just for learning/refining and a few extra bucks

  • http://test.timothysykes.com Timothy Sykes

    yes reaper, its the big trades that really make this strategy, the rest if just for learning/refining and a few extra bucks

  • Luke

    How much did Michael start with before making 70k on your strategy?

  • Luke

    How much did Michael start with before making 70k on your strategy?

  • Reaper

    Luke – I don’t give out the size of my accounts, and it is a pointless question too, because I trade other strategies besides Tim’s. But I will say my account is over $100k and my largest position ever was on SIL with $100k. The one problem with Tim’s strategy is that most pennystocking plays are in rather illiquid stocks, so there is a limit to how much money you can put into this strategy.

  • Reaper

    Luke – I don’t give out the size of my accounts, and it is a pointless question too, because I trade other strategies besides Tim’s. But I will say my account is over $100k and my largest position ever was on SIL with $100k. The one problem with Tim’s strategy is that most pennystocking plays are in rather illiquid stocks, so there is a limit to how much money you can put into this strategy.

  • http://thedailyvento.blogspot.com johnnyvento

    ALAN was not shortable on IB or through Genesis. The play was too quick to ask for borrows from TOS (they wouldn’t have it anyway). Basically this was a play that only Reaper could make.

  • http://thedailyvento.blogspot.com johnnyvento

    ALAN was not shortable on IB or through Genesis. The play was too quick to ask for borrows from TOS (they wouldn’t have it anyway). Basically this was a play that only Reaper could make.

  • mike

    Tim, when ur subscriber loses his butt on the next time he does that, and that stock runs another 100% from where he shorted.. tell us how much he owes his broker.. that was pure luck and the biggest gamble i’ve ever heard.. ballsy my friend, and u try that again, it’ll be the last $17,000 u’ll own. seriously u have no idea

  • mike

    Tim, when ur subscriber loses his butt on the next time he does that, and that stock runs another 100% from where he shorted.. tell us how much he owes his broker.. that was pure luck and the biggest gamble i’ve ever heard.. ballsy my friend, and u try that again, it’ll be the last $17,000 u’ll own. seriously u have no idea

  • tmcnasty

    Reaper you better liston to mike. LOLz

  • tmcnasty

    Reaper you better liston to mike. LOLz

  • Reaper

    johnnyvento – Yes it was shortable on IB. I took all the shares that were on IB (all 12,550 of them) because I was the quickest.

  • Reaper

    johnnyvento – Yes it was shortable on IB. I took all the shares that were on IB (all 12,550 of them) because I was the quickest.

  • Reaper

    Mike – A few reasons why this was not a risky trade.

    1) I had enough capital so that I could’ve survived a temporary 400% short squeeze.
    2) Every single Stockpreacher pump has closed its first day up no more than 50%. I shorted when it was up 100%.
    3) As time goes by and more of Stockpreachers followers lose money and quit buying his pumps (look at WWAG today), the pumps will be weaker and weaker. So if I can short a future Stockpreacher pump when it is up 100% or only 50%, my success will be almost guaranteed.
    4) The rapidity of the stock’s climb would likely scare away normal momentum traders so I didn’t have to worry about their uninformed buying.

  • Reaper

    Mike – A few reasons why this was not a risky trade.

    1) I had enough capital so that I could’ve survived a temporary 400% short squeeze.
    2) Every single Stockpreacher pump has closed its first day up no more than 50%. I shorted when it was up 100%.
    3) As time goes by and more of Stockpreachers followers lose money and quit buying his pumps (look at WWAG today), the pumps will be weaker and weaker. So if I can short a future Stockpreacher pump when it is up 100% or only 50%, my success will be almost guaranteed.
    4) The rapidity of the stock’s climb would likely scare away normal momentum traders so I didn’t have to worry about their uninformed buying.

  • alex

    You should’ve kept quiet cause now everyone is going to be looking for those few precious shares to short on stockpreachaz picks. After reading all this crap about the preacha I decided to subscribe to the newsletter. I haven’t actually noticed when I get the emails, though. Do they come before the market opens?

  • alex

    You should’ve kept quiet cause now everyone is going to be looking for those few precious shares to short on stockpreachaz picks. After reading all this crap about the preacha I decided to subscribe to the newsletter. I haven’t actually noticed when I get the emails, though. Do they come before the market opens?

  • Big T

    Reaper,

    part of the magic on that play was it was a rare “legit” exchange stock. Most pumps, and most of SPs picks are so obscure finding shares to short in any number are the sticking point. With ALAN, this was *not* a factor, IB had a much bigger amount of shares available to short the play, one of the reasons so many of these goons pick the Pinks and OTC freak shows.

    The *isolation* of variables, resulting in more predictable outcomes as Tim notes, makes it possible for a small player to have a shot with penny plays in a way not possible playing SDS or SSO other other liquid to death issues. No wonder the big boys want the average gambler to play the stocks THEY run/buy. In this world of finance, corruption is everywhere, but the Goldman Sachs variety just eats in better lunch rooms and drinks better beer.

    ALAN was a rare opportunity, so making the best of it with a 20K+ position on one cheap stock was a great short, see above…

    In fact, as Tim has observed, you CAN join the ship of fools LONG if quick, and willing to accept some slippage and a market order fill, though the upside is often limited to a degree thereby.

    Sadly, soon Preacher will be out of business, after front loading his picks-when the naive subscriber’s hold too long as investments or into HIS dumps (as a long with front loading) of 50K shares once the momentum runs out the same morning.

    But cheer up, the “stock picking robot marle” is back in action I hear and he/it is now trying to copy Preacher with the gimmick of live picks!

  • Big T

    Reaper,

    part of the magic on that play was it was a rare “legit” exchange stock. Most pumps, and most of SPs picks are so obscure finding shares to short in any number are the sticking point. With ALAN, this was *not* a factor, IB had a much bigger amount of shares available to short the play, one of the reasons so many of these goons pick the Pinks and OTC freak shows.

    The *isolation* of variables, resulting in more predictable outcomes as Tim notes, makes it possible for a small player to have a shot with penny plays in a way not possible playing SDS or SSO other other liquid to death issues. No wonder the big boys want the average gambler to play the stocks THEY run/buy. In this world of finance, corruption is everywhere, but the Goldman Sachs variety just eats in better lunch rooms and drinks better beer.

    ALAN was a rare opportunity, so making the best of it with a 20K+ position on one cheap stock was a great short, see above…

    In fact, as Tim has observed, you CAN join the ship of fools LONG if quick, and willing to accept some slippage and a market order fill, though the upside is often limited to a degree thereby.

    Sadly, soon Preacher will be out of business, after front loading his picks-when the naive subscriber’s hold too long as investments or into HIS dumps (as a long with front loading) of 50K shares once the momentum runs out the same morning.

    But cheer up, the “stock picking robot marle” is back in action I hear and he/it is now trying to copy Preacher with the gimmick of live picks!

  • Big T

    Reaper, /Michael please do not misunderstand, I am glad you banked all that coin, the thought of Preacher not counting on a wel funded short seller to screw up his bull raid amount/net is wonderful, I would love to have been a fly on the wall watching his face when all that short selling rained on the parade, which is not a big of a factor to worry about in most of these pennies, unlike in ALAN as noted above.

    I also oppose the uptick rule and its newer more sinister plans of implementation with possible unintended consequences, and the blaming of short sellers in general. It is sad the public is not informed enough to understand these issues properly, which will affect us adversely, I fear…

  • Big T

    Reaper, /Michael please do not misunderstand, I am glad you banked all that coin, the thought of Preacher not counting on a wel funded short seller to screw up his bull raid amount/net is wonderful, I would love to have been a fly on the wall watching his face when all that short selling rained on the parade, which is not a big of a factor to worry about in most of these pennies, unlike in ALAN as noted above.

    I also oppose the uptick rule and its newer more sinister plans of implementation with possible unintended consequences, and the blaming of short sellers in general. It is sad the public is not informed enough to understand these issues properly, which will affect us adversely, I fear…

  • kondal

    hey….Can anybody tell me howmuch is the commisions of Interactive Brokers on stocks…it say .005 per share…but thats too much because if you 2000 shares tha would be $10…..but I heard IB offers $1 per trade…..I dont know..plz help me.

  • kondal

    hey….Can anybody tell me howmuch is the commisions of Interactive Brokers on stocks…it say .005 per share…but thats too much because if you 2000 shares tha would be $10…..but I heard IB offers $1 per trade…..I dont know..plz help me.

  • Emini

    Prove it.

  • Emini

    Prove it.

  • http://welcometothegutter.blogspot.com Yngvai

    Kondal,

    .005/share, maximum of .5% of trade value. So 2000 shares of a $1 stock would be $10 but 2000 shares of a 50 cent stock would be $5

  • http://welcometothegutter.blogspot.com Yngvai

    Kondal,

    .005/share, maximum of .5% of trade value. So 2000 shares of a $1 stock would be $10 but 2000 shares of a 50 cent stock would be $5

  • alex

    I just realized that tomorrow (the 19th) the stockpreacha will feature UOMO as his pick! hehehe

  • alex

    I just realized that tomorrow (the 19th) the stockpreacha will feature UOMO as his pick! hehehe

  • Big T

    IB is not the best broker for penny stock plays, long, due to per share charges, and you would have buy many shares in too many cases compared to regular more legit stocks. Flat low commissions are no small blessing, so Mytrack or MB trading or even SogoTrade are possibles, as is any that lets you choose and switch all you want back and forth between pricing schedules for commissions.

    Several brokers have decent short locates, most which depends on their *clearing* firm, not the broker itself. It would be nice if IB had flat plans optional, but they appear to not at this time.

    IB is aimed at experienced traders with plenty of capital, many of whom have USD 30K or more to burn, so they have no PDT restrictions…

  • Big T

    IB is not the best broker for penny stock plays, long, due to per share charges, and you would have buy many shares in too many cases compared to regular more legit stocks. Flat low commissions are no small blessing, so Mytrack or MB trading or even SogoTrade are possibles, as is any that lets you choose and switch all you want back and forth between pricing schedules for commissions.

    Several brokers have decent short locates, most which depends on their *clearing* firm, not the broker itself. It would be nice if IB had flat plans optional, but they appear to not at this time.

    IB is aimed at experienced traders with plenty of capital, many of whom have USD 30K or more to burn, so they have no PDT restrictions…

  • ALANsucked

    Now I know who the prick was that cleaned out IB’s ALAN shorts. Greedy bastard. You cost me money.

    One day you gonna do that and get run over. $1, $2, $4, and you will be wiped out.

    Next time leave some for the next guy.

    PS That scumbag preecher is getting desperate . Those Canadian felons will be gone soon.

  • ALANsucked

    Now I know who the prick was that cleaned out IB’s ALAN shorts. Greedy bastard. You cost me money.

    One day you gonna do that and get run over. $1, $2, $4, and you will be wiped out.

    Next time leave some for the next guy.

    PS That scumbag preecher is getting desperate . Those Canadian felons will be gone soon.

  • ALANsucked

    There was a pack of these lowlife email touts about 3-5 years ago. This is nothing new.

    One of the worst was an outfit out of Europe, that had to be mob or dealer connected. They would predict the date and time of the pump many DAYS in advance.

    Gone now.

  • ALANsucked

    There was a pack of these lowlife email touts about 3-5 years ago. This is nothing new.

    One of the worst was an outfit out of Europe, that had to be mob or dealer connected. They would predict the date and time of the pump many DAYS in advance.

    Gone now.

  • http://thedailyvento.blogspot.com johnnyvento

    OK I really have to step in here and counter ALANsucked. It’s true that I tried to short ALAN on IB at that time but I really doubt that he did. Obviously this guy has latched on to my original post. Yes I wish I could have gotten shares but I will defend Reaper here, he got the shares because he was faster and he did not do anything unethical. I tip my hat to him as a superior trader. ALANsucked is just a wannabe faker who just wants to be a hater. I read Reaper’s blog and try to learn from it, I suggest you all do the same. When we have accounts as big as him we can fight for all the shares. I have no problem finding my own way with my own trades. I suggest you all do the same. ** waves fist ** You won this round Reaper!!!

    JV

  • http://thedailyvento.blogspot.com johnnyvento

    OK I really have to step in here and counter ALANsucked. It’s true that I tried to short ALAN on IB at that time but I really doubt that he did. Obviously this guy has latched on to my original post. Yes I wish I could have gotten shares but I will defend Reaper here, he got the shares because he was faster and he did not do anything unethical. I tip my hat to him as a superior trader. ALANsucked is just a wannabe faker who just wants to be a hater. I read Reaper’s blog and try to learn from it, I suggest you all do the same. When we have accounts as big as him we can fight for all the shares. I have no problem finding my own way with my own trades. I suggest you all do the same. ** waves fist ** You won this round Reaper!!!

    JV

  • http://welcometothegutter.blogspot.com Yngvai

    ALANsucked, I happen to know JV and also his trading ability and I can guarantee you he is an excellent trader. So quit your whining that you didn’t get ALAN shares. Sometimes people get the borrows before you do…..that’s the nature of the game…..get over it.

  • http://welcometothegutter.blogspot.com Yngvai

    ALANsucked, I happen to know JV and also his trading ability and I can guarantee you he is an excellent trader. So quit your whining that you didn’t get ALAN shares. Sometimes people get the borrows before you do…..that’s the nature of the game…..get over it.