A Decent Start to December

Yesterday I mentioned that I had SGLP and FRZ on my short watchlist. I played both of them...got a profit on one and am currently holding the other one even.

First came SGLP. SGLP bounced off $3 resistance and started to fade, despite a surging Dow. I got a 10/60 cross to the downside on the 1 minute chart, so I jumped in and shorted 1000 shares at $2.85.

SGLP broke down nicely, falling below $2.50. Then came the last hour of trading. The Dow started to show a lot of strength. Since SGLP's day chart tends to show big tails on the red candles, I knew SGLP usually doesn't close near it's LOD.

Also, based on Johnny Vento's gap stat calculator, SGLP can gap up 50% of the time when it's 10% down. Since this stock tends to have a big bid/ask spread, I didn't want a repeat of what happened with RMTI. I tried to cover my position at $2.46, but only got filled for 100 shares. I tried again at $2.50, and only got filled for 100 shares. Suddenly the ask was at $2.70 and the bid was at $2.54 and I still wasn't filled! The Dow started to show some weakness again, so I decided I'd keep holding. The bid/ask tightened up, but then the Dow started showing strength again. While SGLP doesn't follow the Dow as closely as other stocks, I decided not to take a chance, especially in this really weird market. I covered the remaining 800 shares at $2.56. Overall, it was a $295 profit and an 11.6% return on my position.

Yes, this could have further downside, and this is only the first down day, but, like I said, I didn't want a repeat of my RMTI experience. These illiquid stocks can jump pretty big on any large order at the ask.

Here's the Dow chart:

Here's the 1-min chart for SGLP and my notes.

Here's the 5-min chart for SGLP and my notes.

Then there was FRZ. FRZ had come off of its highs and was trading sideways. It had support at $1.88. I decided I'd go short if it broke this support level. Sure enough, it did, so I shorted 1000 shares at $1.85.

FRZ started to break down nicely. It nearly went red on the day. However, FRZ was certainly a stubborn stock. It bounced and went right back into the $1.70's - $1.80's. It eventually closed at my entry of $1.85.

We'll see what happens with FRZ tomorrow. Volume was weak in the last hour despite a surging Dow, so it could be a sign that buying is finally drying up. This stock has been pretty unbelievable...only days ago it was at 35 cents! It just won't die....at least not yet.

GUTTER STATS:

Yesterday: $9803.37

Today: $10093.37

Gain since yesterday: $290 or 2.96%

POSITIONS TRADED FOR A GAIN:

SLGP $295

TOMORROW'S WATCHLIST:

Short: FRZ

Long Breakout: DISK, HOTT, FRPT, UTI, COGT