A sympathy play is when an indirect catalyst affects stock prices. One company’s news or earnings can pump up the prices of other stocks within the sector … even if nothing’s really happened.
I love penny stock sympathy plays.
These sympathy plays create opportunities for traders.
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The Curious Case of COWPP
Consider the example of COWPP.
Not too long ago, COWPP was trading for about a penny per share. Within about four days, the price skyrocketed to about 33 cents per share.
I’m a trader and teacher, not a mathematician. But even I can do this math: if you’d bought at the low and sold at the high, you’d have more than 30x your money.
That means if you’d bought $100 worth of that stock, you’d have more than $3,000.
I didn’t make that much, but I did make a nice little profit from dip buying this decent runner. It was low volume, so I took a small position hoping it would make a nice bounce as a classic morning panic.
The pattern and price action were solid, but I only got a partial position and didn’t make much money. Now, it’s having trouble at red-to-green levels, and I didn’t want to get greedy. Just as quickly as it began, this stock’s spike could be over.
Was it world-shaking news made this stock price jump?
Not really. It was a sympathy play to DCGD.
DCGD: The Original Play
DCGD has been the biggest winner of the past few months. It recently catapulted from a quarter of a penny to about $2.20 per share.
Conceivably, if you’d bought $100 of this stock, you could have turned it into $80,000 or more.
True, few people get into a pump like this right when it starts. But even if you’d gotten in on the first day of the pump at about 2 cents, you could have netted a nice little 200% profit.
To anyone who falls in love with $DCGD or $VERB or any stock/sector pleas read https://t.co/045R8ZJo7b its the SAME fucken pattern every time no matter what promoters try to say, don’t believe me just look at history. Can’t fight stats/facts but if you do then learn the hard way
Why I Love Penny Stocks
Penny stocks can be hated on … they can be ripped on … you can talk smack about their fundamentals…
But here’s my response:
Screw the naysayers who say penny stocks aren’t worth the time.
Screw the negativity and narrow-mindedness.
Don’t listen to the naysayers! Be a warrior.
You must have a warrior’s mindset, as the stock market is a battlefield, you can NEVER give up even when things don’t go your way!
Focus on big percentage gainers, follow the rules, and you’ll see that penny stocks offer a TON of opportunities for traders.
The Costello Connection
At the center of all of these sympathy plays? A guy named Justin Costello.
It was enough to make the stock go crazy.
Costello’s name was then connected to CLSI, inspiring a related play. It went from about a penny to 10 cents … 10 times your money in a few days. It was following a pattern that my students saw:
I can’t help but to wonder if $CLSI will repeat history IF it can break over .10 again. Take a look at the chart comparison from the same pattern it had back in early 2000. The only guy I know trading back then was @timothysykes . Do you remember this one teacher? 😉 pic.twitter.com/jbZ7hK5zzb
… and I was able to get in on the action early enough to profit:
Now, COWPP is the latest stock rumored to have a Costello connection.
In this case, the sympathy plays were inspired by a person. But it could be based on a hot sector or a hot product. No two sympathy plays are identical, but it’s always a similar story.
And it usually happens fast.
Screw FOMO — Think Ahead
Did you miss out on the first play? Don’t worry too much … and definitely don’t try to force it!
Too often we want to make $ so badly, we then force a trade/investment and guess what happens…we lose…PATIENCE IS CRUCIAL!
I traded DCGD a few times … I never took advantage as much as possible, though.
I got a lot of flack for getting back in at about 50 cents. Who cares?
All said and done, I made about $10K on DCGD … I’m not complaining, because you never go broke taking profits!
If you missed the initial runner, FOMO is understandable. But don’t act on it.
You don’t want to chase the initial one. Instead, be proactive and be on the lookout for sympathy plays.
Don’t chase. Recognize that big percent winners can lead to other big percent winners that are related.
Speeding Sympathy Plays
This is important: Sympathy plays tend to accelerate quickly compared to the original play that inspired them.
DCGD took several months to run up…
CLSI took several weeks…
… and then COWPP took just a few days.
The original play that spikes big will take the longest because there’s no precedent.
But as time goes on and the rumors grow, more people are watching and looking for the pattern.
Don’t fall into the trap of chasing. Be smart: Start thinking about what could be another related play.
And remember: if you miss out on this round of sympathy plays, there will always be more! Don’t fall prey to FOMO.
Recent Tweets, Comments, and Trades from Students
I’m so proud when I read the success stories and lessons my students learn from sympathy plays like this:
Profit.ly user AMejroyce made a nice profit on DCGD:
“Long for the first time (for real): $DCGD, made a nice little profit, $150.00…very first profit ever, thanks Sykes, Grittani, others here, I’ve learned quite a bit. I caught a falling knife and didn’t bleed.”
Profit.ly user Jackaroo got in on the action with CLSI:
“locked $CLSI 35k from .0335, sell .046s. $400-ish. nice way to start the week”
Profit.ly user ronbrown1981 took profits before continuing with the trade:
“$CLSI, bought .082, sold at .08655 and .0906, 40K shares total”
Even at higher prices, students were still making good trades. Profit.ly user savannahpianist traded higher but got out in time:
“$CLSI in at 9.75 cents, half out at 10.45 cents”
Some students, like Profit.ly user PennyStock_MegRussellETI, had great success:
“just took 100% of the 700% gain from today $COWPP”
So did Profitl.y user dani_jeane:
“In $COWPP @ .078 out at .1594 100+ percent profit!!”
@camtastictrades knew what was up with DCGD:
@Hasenrahal1 made a profit on CLSI:
@geb2012 has been studying hard since July … didn’t get in on the trade but was watching and saw the pattern coming…
$COWPP Thank you @timothysykes for https://t.co/rmjDyOdaJ2 and all of the free videos! Been studying since July 4th. Got scared and didn’t get in the play but it ended up doing exactly what I thought when it broke $.10! Must keep studying!
@KKleomenes tried dip buying for the first time with COWPP:
@cfcmickt got in late, but made a nice profit nonetheless:
missed $COWPP yesterday, I was too slow. On my w/list again today for poss dipbuy. Was better prepared. Entered on dip to $0.21 and exited at $0.26 (24%). I think it can go more but sticking to what you have taught us, to take profits and not get greedy. Thank u Tim pic.twitter.com/qyetd2zFOT
[Note that these results aren’t typical. I’ve put in the time and dedication and have exceptional skills and knowledge. Most traders lose money. Always remember trading is risky … never risk more than you can afford.]
Do you have questions about sympathy plays? I have answers. Leave a comment below. I love hearing from my readers.