How To Bake A 25% Overnight Profit Cake And Eat It Too
Take one part failing company (VION), one part 100%+ surge within a few days ($1.25 to $2.50 in 2 days), add in a bushel of bitter shareholders (stock’s down from $28 in 3 years, ouch!), apply an overnight short position and presto…your 25% gain should be ready within 1-2 days…just keep checking in to make sure it doesn’t burn!
VION shows you why it’s good be an overnight short of a failing company—because if there’s overnight news, odds are it’s gonna be bad news. And the news was another delisting warning from the Nasdaq, a mere month after they did a 1-10 reverse split to stay listed! Out of all the companies I’ve ever shorted, this is one of the worst, losing $34 mil/quarter, $50,000 in revenues, $61mil in cash left and $54mil in debt…a homeless guy could do a better job running this POS! (cardboard facilities to cut down on costs)
The stock opened lower on pathetic volume, big buyers below, forget that…I covered at $2.15-ish for a nice $274 gain, after commissions. Earn 12% on your money literally overnight? Yes, please! Yah, I know, I was trying to bake a 25% profit cake, but I just couldn’t wait, I was too hungry…story of my life…coulda woulda shoulda held all day…big buyers got taken out easily…but enjoying undercooked profits is my specialty…look at the multi-day chart, it’s THE SAME as previous successful trades/calls: SHZ, DARA and about a hundred others which have made me into a millionaire, this is just the latest example of how it’s great to short into a negative close on the third day of an exponential microcrap runup…and it’s really the only pattern I should ever trade (Just as I preach and teach in my instructional DVD PennyStocking whose cost is covered by this trade alone!) Perfect entry + decent exit = good trade but you can definitely do better
Aftterwards, I saw some morning fades on some other recently strong microcrappers, VVTV, HALO and SEED so I knew the environment was conducive to shorting. With that in mind, I took aim at COIN and BPAX, both hard to borrow at Thinkorswim, so I opened the chat window and reserved shares to short just in case.
COIN’s pattern wasn’t ideal, so I passed (made the right call, it kept going higher), but BPAX was just slightly negative on the day at $3.30 so I zeroed in on it…I don’t like shorting in the morning, but if a stock that’s up a ton over the past few days is down slightly on the day with a chance of being down big, I’ll consider it.
Since the weather for shorting these things was sunny today, I shorted 1,000 shares at $3.28 (somewhat aggressive but no overly) ideally covering at $3 (since it’s up from $2 two days ago). Big blocks sells took out $3.27, $.25 and $3.20, so I was up a bit, but there were big buyers at $3.10, $3.12 and $3.15…I said screw it, cover at $3.17-ish, profit of $85 after commissions…stock went a bit lower, but then bounced, proving an early exit is not always the wrong decision, especially when you have a profit / there’s little volume and big buyers everywhere.
“Solid day…just 24 more like it and I’m over the magical $25k SEC freedom hump!”
And that’s the kind of thinking that almost got me into trouble I wanted more profits and thanks to a 3-day runup in beaten down solar stocks, I thought I saw another good short selling opportunity. SOLF, AKNS and ASTI were the three suspects—I chose ASTI—because it was up the most (thinking it had the furthest to fall)—shorting 500 shares at $11.81…but 10 min in and with the market and the other 2 solars tanking (SOLF dropping 75 cents on a perfect head and shoulders grrrrrrrr), my ASTI was flat
Since it wasn’t my ideal pattern, and ½ of the 4 mil float is short, I couldn’t risk a short squeeze into the close/tomorrow morning so I covered at $11.85, for a stupid $30-ish loss. Stupid trade, good loss cutting (it did breakout another 25 cents/share), latest lesson in why you gotta ignore your opinions and go with the charts—look at a 2-day SOLF chart and see its crack into the close was the 4th try to crack $11.80…not ideal, but infinitely better than shorting into the random solar strength that is ASTI
Trading too much…gotta stop
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| Date | Stock | Buy | Sell | Net |
|---|---|---|---|---|
| Sept 4 | COIN | $5.70 | $6.21 | $745 |
| Sept 3 | COIN | $6.49 | $6.30 | $305 |
| Sept 3 | COINW | $2.75 | $2.85 | $180 |
| Sept 2 | TAYD | $7.51 | $8.13 | $545 |
| Aug 18 | FOUR | $2.80 | $2.66 | $342 |
| Aug 14 | APII | $2.66 | $3.30 | $1261 |
| Aug 12 | APII | $3.25 | $3.40 | $285 |
| Aug 7 | NOBL | $5.02 | $5.49 | $680 |
Total: $26,508 (
114%)
1Mike T.
March 26th, 2008 at 5:57 pm
Good post but I think one of th emost important lessons with this one is the following:
“this is just the latest example of how it’s great to short into a negative close on the third day of an exponential microcrap runup…and it’s really the only pattern I should ever trade”
Am I right or am I right? (all the people that follow Tim’s blog should know that line by heart now for good reason!)
2mitils
March 26th, 2008 at 7:09 pm
tim…i am wondering if this is your only strategy….shorting the micro capers!.. This seams to be ideal rig ht now, but i am just wondering how well it will work once market goes back in to rally mode!….do u have an alternative strategy or u believe this works no matter what….
for example how much this process helped u make during Sept to October 2007?
please post some of the plays you did during that time.
3timsykes
March 26th, 2008 at 7:17 pm
this is the strategy i’ve been using since 2001! it works in bull and bear markets, you just need to be more aggressive at certain times….bring on rally mode, then there’ll be more plays!
4angrytrad123
March 26th, 2008 at 7:44 pm
tim sykes, im beginging to doubt u.
u AND UR PENNY STOCKS
futures r the way to go
5timsykes
March 26th, 2008 at 7:45 pm
u can doubt me all u want, many do, all i’m gonna do is keep trading the way i’ve learned to…its a very small game but thats why it works so well, gift and the curse
6Jim
March 26th, 2008 at 9:31 pm
Tim,
What is this SEC freedom hump?
—plug book now i know its coming
7timsykes
March 26th, 2008 at 10:36 pm
no plug needed, pattern day trader rule wasn’t in effect last time I had under $25k
8Mike
March 26th, 2008 at 11:06 pm
Tim,
What did Andrew Horowitz say about the merits of mustaches?
9Mike
March 27th, 2008 at 12:00 am
Mike Lewis had interesting article about Bear Stearns similar to what you wrote, http://www.bloomberguniversity.....refer=home
10wu
March 27th, 2008 at 12:07 am
tim
I m new to this but i see you shorted it but are you also saying, Vion has a chance to get a pop back up within thursday and friday period? thanks !
11mitil
March 27th, 2008 at 12:09 am
tim ..
how did you came up with BPAX there is no news behind the move…it got kind of week today. very similar to vion!
12Mike
March 27th, 2008 at 12:09 am
“this is just the latest example of how it’s great to short into a negative close on the third day of an exponential microcrap runup”
But you skip it if the exponential runup is on an earnings report?
13NeilTheRealDeal
March 27th, 2008 at 3:13 am
yeah we don’t like earnings. Those are signs of a good company. We like the crappers.
14Jason R.
March 27th, 2008 at 6:13 am
Seems like the date and times are back up on the press releases on Yahoo Finance.
155holeSAVE
March 27th, 2008 at 7:17 am
Are you getting times on Yah.fin? All I’m seeing is dates…
165holeSAVE
March 27th, 2008 at 7:18 am
oops my bad, I had a view saved from yesterday.
17coolguy
March 27th, 2008 at 7:40 am
Actually, HALO wasn’t down all day long except for at open it dropped to $6.55 and quickly poped back up to $6.70 area and stayed there all day long…how boring!! And at the end dropped to $6.50 area and closed….perhaps daytraders fluffs for all day long. However, closed at red after several days long up, and according to Tim, it is the first sign to short if shows further weakness. I am ready to short, if HALO shows weakness today.
18Dan
March 27th, 2008 at 7:54 am
Anyone going long solf ?
19timsykes
March 27th, 2008 at 8:27 am
loving that ASTI is up $2+, great cover
20Sequoia
March 27th, 2008 at 8:47 am
Goooood moooooooooorning New York !!!
Wake up ! Want some Coffee and “des croissants chauds” ?
21manhack
March 27th, 2008 at 8:50 am
Dang….BPAX is rocketing up!
22timsykes
March 27th, 2008 at 8:56 am
ypu, BPAX, SOLF, ASTI, REED, all these momos, if they aint goin down, they gonna squeeeeeeeeeze
23timsykes
March 27th, 2008 at 9:02 am
short 1000 REED at 4.39, right into the madness, a few people getting squeezed, think i can cover 4ish
24lmsmith
March 27th, 2008 at 9:06 am
Time to short COIN
25Dan
March 27th, 2008 at 9:14 am
solf going to 18 today
26Thomas
March 27th, 2008 at 9:15 am
If the pattern daytrading rule was’t in effect last time, why are you using an American broker this time? Find a foreign broker that doesn’t have to follow that rule.
27timsykes
March 27th, 2008 at 9:25 am
solf is not going to 18, in fact, shorts would be up 50 cents/share if they shorted when such ridiculous price targets are thrown around
28Neil
March 27th, 2008 at 9:31 am
ASTI: any more squeeze left in it?
29manhack
March 27th, 2008 at 9:34 am
HALO….going red
30tsa
March 27th, 2008 at 9:35 am
Tim you keep your position on REED?
31timsykes
March 27th, 2008 at 9:38 am
yup, got in too early, but REED’s price action is very encouraging, lots of big sell blocks up above, taking out the big buy blocks, still wanna cover under $4, this should be a $4.50 double top
32daveinjapan
March 27th, 2008 at 10:14 am
now shorting ASTI at $14.99…
33daveinjapan
March 27th, 2008 at 10:18 am
might wanna put APWR back on watch, they are up lately, report April 1st, and even get to ring the opening bell at NASDAQ on 4/16, LOL!
34timsykes
March 27th, 2008 at 10:26 am
godamn REED is beautiful, huge sell blocks just above my entry, volume fading, plenty of room for a 50 cent drop
35manhack
March 27th, 2008 at 11:18 am
Wonder what the deal is with BPAX? Would this be a good short if it starts a sideways action/downward trend?
36JJ
March 27th, 2008 at 11:30 am
BPAX at 3.94 good entry to short?
37timsykes
March 27th, 2008 at 11:43 am
why r u guys even considering BPAX as a potential short here? it’s broken through resistance, took out a ton of seller yesterday, sure, it could go down, but it all its done is show signs of strength, u gotta learn to understand these short squeezes better
38timsykes
March 27th, 2008 at 11:53 am
i dont like an asti short either, its solid news, avoid!
39daveinjapan
March 27th, 2008 at 11:55 am
covered ASTI at $15.35, ouch!
40lmsmith
March 27th, 2008 at 12:10 pm
Don’t short solar now…..
41NeilTheRealDeal
March 27th, 2008 at 12:14 pm
what about AKNS? up to $8 from $4.50 in just a few days and it looks like its heading back down
42timsykes
March 27th, 2008 at 12:35 pm
covered REED, up $100ish, missed 3 chances at getting out at $4.11ish wanted the big drop, now theres buyers everywhere and i gotta go to a meeting….ahhh the life of a part time trade, hopefully it squeezes into the close
43manhack
March 27th, 2008 at 12:38 pm
davinjapan…..holy crap man…ASTI dipped low
44lmsmith
March 27th, 2008 at 1:11 pm
Neil The Real….. I am thinking of shorting AKNS…. I wish I caught it at 7.95….. I might short now….
45NeilTheRealDeal
March 27th, 2008 at 1:17 pm
I caught it right as it broke through $7.50. lookin good so far
46NeilTheRealDeal
March 27th, 2008 at 1:21 pm
I also went long on its way up from 7.41 to 7.80 today. now i’m short on its way down. very happy with it
47M. Li
March 27th, 2008 at 1:43 pm
Tim, what do you think SYBD? thanks
48Jeff C
March 27th, 2008 at 1:53 pm
Anyone watching COT?
49lmsmith
March 27th, 2008 at 2:05 pm
I am still holding my COIN Short…. will dump soon…
50Al
March 27th, 2008 at 2:18 pm
BPAX nice intraday double top forming. thinking of shorting.. any opinions please