How To Bake A 25% Overnight Profit Cake And Eat It Too

Tags: Analogies, Good Trades, Pattern Day Trader Rule, Patterns To Short, Short Selling, Supernovas

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

Get Tim's pre-market watchlists, real-time trade alerts & access to subscribers-only website all for just $1/day -- sign up for TIMalerts today!

Alternatively, get all blog posts emailed directly to your inbox by signing up below: