A mistake that I may get nice redemption for

Yesterday when I posted my month in review, I didn't think I would be making any trades today, so I figured I was done for the month.

However, I had VCSY on my radar as a potential G-Pattern setup. VCSY went vertical a few days ago, looking awfully like a pump and dump. In fact, it was very much looking like the start of a Supernova pattern that Timmay likes to short. However, it's managed to hold most of its gains, and has been consolidating.

The G-Pattern is a pattern recognized by a trader nicknamed EliteG, who has posted over on Cameron Fous's board. This pattern is used to recognize those explosive penny stocks that increase by ridiculous amounts (double, triple, or quadruple in price). The G Pattern starts with a strong volume and price move (the G1 stage). This is followed by a low volume pullback that doesn't pierce the low of the G1 stage (the G2 stage). The G2 stage must last at least 2 days. This is critical, and is what differentiates it from a pump & dump or supernova pattern. A supernova involves high volume panic selling rather than a low volume pullback.

The G3 stage is the breakout stage, where there is another upward movement in price and a return of volume. To fulfill the pattern, the price must break the highest open or close of the G1 stage.

As you can see from the chart, VCSY fills that pattern perfectly. You had the big 3-day price and volume surge. This was followed by a 2-day pullback in price, and volume was only a fraction of the initial surge. This indicates that there wasn't any significant panic selling, and the stock was consolidating right around 6 cents.

Today, there was a return in volume, and price started to move up again. On top of that, you've got the white candle piercing the upper bollinger band with an RSI2 of more than 90, which is the sign of a strong stock.




Seeing this developing today, I knew I wanted to enter. I couldn't pass up the chance at such a perfect chart pattern. It was just a matter of finding the right entry point. Technically, the best entry point on this G pattern would've been on the 6 cent break. There was a nice volume surge right around 6 cents, and I thought about entering. However, I noticed on the 1-hour chart over the past few days (always good to look at multiple time frames) that there was significant resistance at 6.4 - 6.5 cent range. Since you can enter the G pattern at any time on breakout day, I decided to wait to see if that resistance would break.

The stock surged from 6.2 cents to 6.5 cents, and was there for a few minutes. Then, it hit 6.55 cents. I jumped in for 80,000 shares....a very large percentage of my capital because this chart pattern was just tooooo perfect.

However, the price didn't hold there very long, and quickly started coming back down. Since I was risking a large loss as this was a small penny stock, I had to get out quickly. I quickly used Thinkorswim to close my position. It automatically put in a 6 cent limit. I should've changed this limit to the bid price which was 6.3 cents. However, I didn't, and part of my order ended up getting filled at 6 cents and the other half at 6.3 cents. My average fill was 6.1 cents, which cost me $150 more in a loss. I ended up with a $450 loss after commissions. Ouch! So much for being over the $6000 mark on my account!

The fact is that I chased the stock a bit. Not because I didn't wait for the breakout, but, by looking at the chart, there was a pretty sharp spike from 6.2 cents to 6.55 cents, meaning that there was a good chance of a retracement. I should've waited for it to settle down a bit to see if it would hold above 6.5 cents.

LESSON LEARNED: Don't be too quick to jump in a breakout like this. Let it settle down to see if it holds.

LESSON LEARNED: With small pennies, put your limit at the bid price, not the even cent, to ensure you get a better fill price.

I continued to watch the stock. It's too bad I didn't have the balls to hold through that dip, because the stock price started coming back up. Again, it was sitting at 6.5 cents, this time consolidating nicely there. Finally, it hit 6.6 cents. I waited again to make sure it wasn't a fake breakout. I then put in an order for 70,000 shares at a 7 cent limit.

Working....working....working....working.....

Minutes passed, and the stock price climbed to 6.9 cents. My order still wasn't filled! Not even a partial fill! I got scared of chasing the stock, so I canceled my order. I kept entering my order and canceling it as I would put in the order but not get a fill after a few minutes. Thinkorswim called me to make sure there wasn't something sketchy going on.

I saw the price stabilizing around 6.9 and 6.95 cents, with a tight bid/ask spread in the last hour of trading, so I finally committed and jumped in for 70,000 shares. I got my fill at 6.95 cents. This time I was determined not to get shaken out. The price did dip to 6.7 cents briefly but quickly returned to 6.9 cents. The stock closed strong, right at 7 cents.

It's too bad I got shook out, because I'd be up $300 right now rather than down over $400. Hell, if I entered on the 6 cent break like the G-Pattern tells you to, then I'd be up over $600.

However, there is a really good chance I may get redemption on this play (just like I did with UVSE where I first lost on it then won big). First, it's a perfect G Pattern setup. These patterns often run 100% beyond the breakout point...just look at all of Elite-G's examples here.

But, there's more to this play than just the chart pattern. VCSY filed a lawsuit against Microsoft for patent infringement back in 2007. This case was settled out of court recently (which explains the big recent surge), and the judge signed off on it today. What we don't know are the details of the settlement. If the details of this settlement are reasonably positive at all, it could cause this stock to surge in price like nobody's business. The question is what the details were, and when they'll be released.

People on IHUB are comparing this to PTSC. Back in 2006, PTSC won a patent infringement in court and its stock price went from pennies to well over a dollar.



Of course, this is a settlement, not a court case that was won. Again, we don't know the details, and we don't know when those details will be released. Today's volume and price action indicates that the details may be positive (as news is sometimes reflected in the share price before it even comes out). Or, it could just be people "buying the rumor".

There's even more promising things about this stock. The fact I struggled to get my order filled is a good sign, meaning people are holding onto their shares of this thing and not selling. Also, message board hype on Yahoo and the Raging Bull is picking up on this one. IHUB is slower but there's talk there as well.

Like UVSE, this is one of those plays where all the variables are in line...chart, explosive penny stock, hype, and rumors. This may be a big home run play for me. We shall see.

GUTTER ACCOUNT STATS:
Yesterday: $6098.42
Today: $5629.16

Today's loss: $-469.26 or -7.7%

Since I assumed that I wouldn't be trading today, I will count yesterday as the last day of the month and today as my first trade of August (because I don't want to run all those stats again!). So this trade will show up in my August stats when I do my August review.

Positions being held overnight: VCSY

July Month in Review

Despite numerous mistakes, July ended up being my best trading month so far. I still have improvement to make, but I'm getting better.

Here's my stats for the month:

Starting account value: $4856.64
Ending account value: $6098.42
Total gain: $1241.78
Total gain (%): 25.6%

Average daily return: 1.79%
Average daily P/L: $59.13
Annualized return: 652.3%
Sharpe Ratio: 2.50
Sortino Ratio: .0016
Maximum drawdown: -22.06%
Total commissions paid: $933.90

Total # of trades: 23
Total # of winning trades: 10
Total # of losing trades: 13
% winning trades: 43.5%
Average # trades per day: 1.1
Largest # consecutive winners: 4
Largest # consecutive losers: 6

Positions held long: 18
Positions held short: 5

Largest winning trade: $1172.40
Largest winning trade (%): 57.12%
Largest losing trade: -$500
Largest losing trade (%): -20.59%

Average overall trade: $52.15
Average overall trade (%): 3.16%
Average winning trade: $309.66
Average winning trade (%): 15.6%
Average losing trade: $-145.94
Average losing trade (%): -6.44%

Total # trading days: 21
# green days on account: 7
# red days on account: 14

Here's a graph of my account over the month:



Here's a graph of my account from when I first started trading at the end of April. I actually started trading with less cash (around $2500) and added money later on at the beginning of June. This graph operates under the assumption I started with all the cash I eventually added. You can see that April and May were rough months for me as I was learning. June was better where I was pretty much flat, and finally, this past month, I made back the majority of what I lost.




Here's a list of all my trades for the month. The ones with asterisks indicate trades that I felt were "bad trades"....either trades I shouldn't have entered, or trades that I screwed up my entry or exit badly. You can see I started off the month badly, but these "bad trades" got less frequent as the month went on, indicating improvement in my trade selection and execution. You can see one of my "bad trades" was actually a winning trade...it was where I screwed up my exit on UVSE and ended up with only a $180 profit rather than over a $1000 profit.



You can see I paid a lot in commissions this month. That's mainly due to playing the ultra-low priced OTCBB stocks where I end up paying $20 - $50 commissions for very large orders.


If you compare my stats to last month's stats, you'll see I've improved significantly. However, there are other areas I could still improve upon.

Where I've improved:

1. Last month my average winning % per trade was too low. I had a goal of increasing my winning % per trade, which I succeeded in doing. This month I significantly improved it to almost 16% per trade
2. Last month I had the goal of reducing my number of trades. I succeeded and cut my # of trades by almost half.
3. I improved in both the Sharpe and Sortino ratio. In fact, my Sortino ratio is now positive rather than negative like last month.
4. My average overall trade was positive rather than negative like last month.
5. My average winning trade in $ was much, much higher than last month.
6. My % return for the month was much better than last month
7. My largest # of consecutive winners was double that of last month

Where I can get better:

1. While my % of winning trades improved, it's still under 50%. It needs to be at least 60-70%. Seven of my losing trades were "bad trades" that I could've avoided. If I hadn't made those bad trades, I would've been in that 60-70% range.
2. In relation to #1, I need to reduce my bad trades. I got better as the month went on. Those bad trades cost me up to $2000. If it weren't for those trades, I could've finished the month up 50% or more.
3. In relation to #1, six losing trades in a row is too many. Three of those were poor trades, so that # could've been reduced to 3.
4. I had too many red days on my account. This is again due to too many mistakes.
5. While my average losing trade went down in both % and $, it's still too high. Ideally, it should be under $100 and under 5%. Again, this was mainly caused by some of my poor trade decisions earlier in the month.
6. Maximum drawdown was much higher than last month, and this again was due to some poor trade decisions earlier in the month.
7. Most of my gains came from UVSE. While that's not necessarily a bad thing (it was a solid trade based on a number of factors), I need to have more consistency in my winners. UVSE helped buffer me against some big mistakes this past month. By eliminating big mistakes, and improving my exits from my trades, I'm confident this will improve.
   

Overall, things are looking better and better, and I'm looking to have August be an even better month than July was.

As always, I have to thank Timmay and Mike_13th for their help in my progress.

Perfect exit in the gutter

Yesterday I mentioned how I had my eye on RDN and LCC for green.

RDN went red at the open, but LCC went green. I jumped in for 500 shares at $5.29. It spiked, then had a brief dip and went red for a little bit. I almost got shook out. I actually had an order to sell my position for a small loss but the price went below my limit order, so my order didn't execute. I canceled the order, and the price came back up.

The price ended up going all the way to $5.80. Judging from the chart on 5/22, it looked like there was resistance at $5.80. Sure enough, it looked like LCC was having a hard time going higher. I jumped out at $5.78 for a $230 profit. Good thing I jumped out, as LCC tanked immediately after I sold out of my position. In fact, it's fallen below $5 as I write this. Talk about good timing!

That is my last trade for the month, as I have a meeting this afternoon and have to see a client tomorrow morning so I won't be able to make any plays.

I'm finishing the month with my account back over the $6000 mark. I'm at $6100 now and finished up over 25% for the month. I finished with 4 winning trades in a row. Although 3 of those I didn't gain much, I'll still take a winner over a loser any day. It's nice to finish with 4 winners in a row after having a bad start to the month.

I will write a month in review blog post when I get a chance.

Nothing exciting in the gutter

Yesterday I bought BIHC, OFI, and ALDN.

I couldn't watch BIHC this morning, and I was concerned about the fading trade volume, so I put in an order to sell my position at the open. I got filled at 5 cents, for a measly $40 profit after commissions. I paid $40 in commissions alone which took half of my profit since I only had 20,000 share position. I wish I had taken a bigger position in this yesterday to help offset the high commission.

BIHC dipped briefly but then ran up to 5.8 cents. It hovered in the mid 5's until selling took over and it went red. It was good that I got out, but I did leave over $100 on the table by selling at the open. Still, I had to play if safe.



After big volume yesterday, ALDN was pretty weak. I ended up selling at $10.16 for a measly $3.80 in profit.



Finally came OFI. OFI gapped up, but volume wasn't as strong as yesterday. It was hovering around $9.25 for a while, and I kept holding to see if it would go higher, but it never did. I ended up selling at $9.18 for a small $56 profit.



No other plays for me today. I am watching RDN, BKUNA, UAUA, and LCC as possible day trades tomorrow. These are all big day rangers that have the potential to move a lot in a day. I'm watching RDN and LCC in particular, as these are sitting just under even numbers. They may make good buys if they cross those even numbers on green, a la Mike_13th's trading style.

I'm also still watching EFFC for a breakout.

We'll see how tomorrow goes. It's the last day of the month, and I'd love to finish the month with my account back over $6000.

GUTTER ACCOUNT STATS:

Beginning of month: $4856.64
Yesterday: $5845.98
Today: $5867.87

Today's gain: $21.89, or 0.37%
Gain since beginning of month: $1011.23, or 20.8%

Positions traded for a gain:

BIHC ($40)
ALDN ($3.80)
OFI ($56.30)

A lot happenin' in the gutter

Today started out with more missed opportunities.

XOHO was announced as a prehit in Mike's chatroom. They had very positive financial news. XOHO opened green, but there was hardly any volume for the first 3 minutes or so, so I decided to look at other plays.

Big mistake, because volume came in only minutes after I stopped looking at it, and XOHO ended up running past 70 cents.




LESSON LEARNED: Just because it doesn't open with good volume at the very beginning doesn't mean it won't move. Keep your eye on the prehits.

BCRX was another prehit, in combination with drug news. These also like to run. However, it opened red, so I decided not to play it. However, that was just a brief morning sell-off, as it then turned green and ran. So, basically, I learned the same lesson as above. Keep your eye on those prehits, even if they open red!!!!!



Yesterday I talked extensively about BIHC's setup. BIHC was looking like it was ready to break out. I thought about jumping in a bit early at 4.4 cents, but decided to be conservative and wait for the breakout. It broke 4.5 cents, and I jumped in for 20,000 shares at 4.6 cents. It ran as high as 5.7 cents, only to pull back and close at 5.2 cents.




I'm holding BIHC overnight. However, I'm not sure yet what I want to do with it. I have to see a client during the market open tomorrow so I won't be able to watch it. I may set an order to sell at the open, or maybe set a conditional/stop order just below 5 cents to see if it will still run. The chart looks great, except for one thing....very little volume. There's a lot of message board hype on this one, but I'm not sure if this run can continue unless we see a PR or something to bring in new buyers.

I'll check it before the market tomorrow and make a decision then how I want to play it.

Yesterday I mentioned how I had bought a position in GFRE. GFRE gapped up, opening right at 95 cent resistance. However, it pulled a gap & crap maneuver. On top of that, volume and liquidity were terrible. I don't know how a stock can go from such huge volume one day to so little volume to the next. I got out at 82 cents for a $108 loss.

GFRE is still showing the trend of progressively higher lows, so I'll still keep an eye on it.



Finally came the power hour. About 15 minutes before the market close, I decided to buy 300 shares of OFI. I got filled at $8.96. However, it had a brief sell-off just before the close and closed at $8.87.

OFI's day chart looks beautiful. It's a nice clean breakout on big volume.




Since I can't watch it in the morning, I'll set a conditional/stop loss order in the $8.60 - $8.70 range if this breakout doesn't continue.

Another position I took before the close was ALDN. Normally, I won't buy breakouts in downtrending charts. However, this was a nice clean break of $10, a significant psychological resistance point. Volume was strong. I'm looking for this to try to fill the gap. I got 200 shares at $10.10. ALDN closed at $10.17. I'm looking for a push to $11 - $12 where I'll get out.

Even though it's a breakout in a downtrending chart, this play is a good risk reward for me. I'll put my stop loss just below $10, where I would be out for only a $30 loss or so. There's a good chance of this making a move towards $11 - $12 for up to a $200 profit or more for me.



Other plays I'm watching this week:

GNLK is setting up very nicely for a breakout. Look at the volume and the MACD crossover.



Yesterday I mentioned SKNY breaking above the 50 day sma. I said it wasn't my type of play. Too bad, because I missed out on a nice profit.




Yesterday I mentioned how NNVC couldn't decide whether to fulfill a head & shoulders pattern or not. Looks like the head & shoulders is winning. Unless they announce a very, very strong HIV PR, I doubt I'll be playing this any time soon on this chart pattern.



GSPG keeps following the same pattern. Break out, small pullback, rise up, break out, small pullback...now it's looking to rise up again.




GUTTER ACCOUNT STATS:

Beginning of month: $4856.64
Friday: $5865.73
Today: $5845.98

Today's loss: $-19.75, or -.34%
Gain since beginning of month: $989.34

Positions traded for a loss:

GFRE: $-107.90

Positions being held overnight:

BIHC (20,000 shares)
ALDN (200 shares)
OFI (300 shares)

Setups for Next Week in the Gutter

In my last blog, I mentioned how I bought 1100 shares of GFRE before the market close.

While this is not a Timmay-pennystocking-type breakout setup, it is a solid technical play with a good risk/reward.

Typically I don't play bottom reversals. However, there are high probability setups in some of these bounce plays if you look for the right things in the charts. In fact, my biggest gainer since I started trading was UVSE, which was a bottom reversal.

GFRE is a strong technical setup. You can see in the chart that there was a strong bounce on July 21st, followed by a low volume pullback. This pullback did not crack the low of the initial surge, and the stock is now uptrending again, confirming a reversal (rather than just a bounce in a downtrending stock). If you draw a trendline, you can see progressively higher lows since the bottom on July 18th.

Also, volume on Friday was HUGE. In fact, it was one of the highest volumes on the 1-year chart. Volume often precedes price, so this is a good sign.

Other technical indicators are also favorable. The RSI is rising up out of oversold territory. The MACD fast line is crossing over the slow line. The slow stochastic is also rising up out of oversold territory.

I went long 1100 shares at 90 cents. If it breaks resistance in the 96 cent - $1 range, then I will add to my position. If it fails to break that, and comes back to 80 - 85 cents, I'll exit with a small $50 - $100 loss. Thus, I have the potential to make over $500 on this play if it breaks out, and lose only $50 - $100 if it doesn't. Thus, this is a solid risk/reward play.




Now, let's compare GFRE to UVSE, my biggest winning trade so far. You'll see a lot of similarities in the charts.



In fact, if it hadn't been for UVSE announcing more dilution which killed the run, I would've made even more money off of it.

GFRE also has some similarities to MKTY, which was also a recent big bottom reversal runner.



So, GFRE is looking like a very solid setup. Message board chatter on IHUB has been quiet about it, but chatter is picking up over on the Yahoo message boards.

Another setup that's looking good is BIHC. It's set up for a breakout, sitting just below 4.5 cent resistance. It had a big surge in late June, followed by a pullback. The price held up on low volume, which can be bullish. Volume looks like it's picking back up. The MACD has crossed over, and the Chaikin money flow has moved into the positive, indicating buying pressure.




There's been a fair amount of message board buzz about BIHC over on Yahoo, IHUB, and The Lion. Supposedly the "company" is doing a share buyback to reduce the authorized shares, and also an unnamed "third party" has supposedly offered to buy some of the outstanding shares for 20 cents per share. This has created a ton of hype. Of course, we need to remember here that BIHC is a stinky pinky, and looks like a pretty sketchy operation to me. In fact, there's rumors that the CEO is actually the alias of another CEO of some other operation. There's questions whether the CEO, Cris Galo, is even a real person. Also, BIHC has the Caveat Emptor symbol over on pinksheets.com.

Of course, I could care less as to whether this operation is legit or not. This is the land of the stinky pinkies. I'm not looking to invest in this thing. All I care about is a good chart setup, along with pumping and hype, so I can hop in and hop out for a profit.

Another stinky pinky with a good chart setup is EFFC. This company supposedly has "alertness monitoring technology" to prevent people on the job (like truck drivers) from falling asleep...not that I care. I only care about the chart.

I mentioned EFFC in last week's blogs. EFFC looks ready to break out, sitting below 17 cent resistance. It's forming a tighter and tighter bullish pennant, indicating it's ready to break out. This is a low floater (well, for a pink sheeter at least), so it won't take much buying pressure to get this thing to move. The 200 day sma looks like it's flattening out and getting ready to turn up. The price is holding up on low volume, which is bullish. A PR could get this thing to break out easily. 20 cents is the next resistance point on the 2 year chart.



GSPG is pulling back a bit, but may make a good future breakout play.



ZYXI is now setting up to be a good short again. Let's see if it can touch $4 before it falls back. Maybe I won't miss it this time.



SKNY was a big gainer back in April that seem to be creeping its way up again. It just broke above the 50 day sma, and looks like the MACD's are ready to cross 0. Not really my type of play, but I'm keeping an eye on it.



FRTL looks like it may be starting a reversal after its pull back. This thing has yet to have a single PR. One PR may get this stinky pinky to really move, particularly if it can break to new highs.



IDAE can't seem to make up its mind whether it wants to break out or tank.



The spammer MNLU is creeping back up. Either it will be a breakout play, or a nice short on the failure to break out.



IFLI is forming a nice G Pattern setup, with the high volume surge and the low volume pullback that didn't pierce the low of the initial surge. It also looks like it wants to break above the 50 sma. We'll see if this reversal pattern continues.



VISN had a huge surge on big volume on Friday. It's poised for a breakout to new 52-week highs, but it may pull back a bit and consolidate before it moves up again.



Finally, I'm still keeping an eye on NNVC. NNVC can't seem to decide whether it wants to do a head & shoulders pattern or not. RSI and MACD can't seem to decide what to do either. The reason I still keep an eye on NNVC is because it ALWAYS moves big in response to significant drug (particularly HIV) news, as you can see by my circles on the chart. Normally I wouldn't trade in response to news, but NNVC tends to be pretty predictable if the hype is big enough. I'd only buy into this on a significant HIV PR. They tend to release PR's on Mondays and Wednesdays.




So those are some of the setups for this week. Can't wait to see how GFRE turns out.

Friday's Gutter Review

Friday was a bunch of missed plays.

On Thursday I mentioned how I tried to short RDN into the close, but no shares were available to borrow. I was able to find shares before the market, so I reserved 1000 shares. RDN hovered around $2, but then quickly tanked to $1.75...too fast for me to get in there. I should've just jumped in at $2 as it was close to what my entry would've been yesterday. So I missed out on a quick $200 profit.




Tony Ellis, one of Tim Sykes' DVD students, mentioned ZYXI in Mike's chatroom as possibly setting up for a double top. Tim also was thinking the same thing might happen, so I didn't watch it closely. Well, instead of being a double top, ZYXI ended up being a great breakout that I missed out on.



Yesterday I tried to find GRH shares to borrow, and kept trying this morning and all through the day as well. Alas, none were ever available. Too bad, because GRH showed nice tankage.




I also looked into shorting the spammer SLAT as it formed a triple top, but no shares were available.




I did buy 1100 shares of GFRE into the close. I will go into my rationale in my next blog when I talk about next week's setups.

Silence in the gutter

No trades for me today.

On my watchlist for tomorrow:

EFFC to break out of its pennant formation
RDN short under $2 (tried to short into close today but no shares available to borrow)
GSPG to break out of its consolidation pattern
HYHY to break above $1.50, or short if it fails to break it
GRH as a potential short

How I let emotions give me a loss rather than a profit

One key aspect of being a good trader is to keep your emotions out of your trading. I failed to do that today.

Yesterday I mentioned how I shorted MKTY into the close. It was a very risky play because I was shorting a strong stock. However, because shares are getting more and more difficult to borrow (particularly because of Timmay and his alerts), I decided to be aggressive.

I figured there was a good chance of a morning squeeze. It was just a matter of how much. Yesterday, I looked at the 6 month chart, and saw that MKTY had a previous support level of $5.50 around March.



Figuring that support often becomes resistance, I figured that if this squeezes, it will squeeze to around $5.50. However, if it squeezed further, it would be over a $300 loss on my position, which would hurt.

MKTY opened red, had a brief short dip, and then squeezed past $5. I debated what to do....get out and take the loss quickly? I could've been out with a $50-$100 loss. But, that means I would be giving up my hard-to-borrow shares. MKTY kept climbing higher...$5.15, $5.20...the pain was getting more intense. The big bid/ask spread didn't help either. Finally, I let my emotions take over and jumped out at $5.42 for a $285 loss. MKTY proceeded to touch $5.50, only to fall hard the rest of the day, closing in the high $3's.



If I had held, like the chart was telling me to, I would've ended up with a $500 profit. Add that to my CVP profit (which I'll mention in a bit), and I would've made $700 on the day, and my account would've been up to $6500 from $5800. Instead, I ended up with a small overall loss on my account.

What makes it hurt more is that I jumped out only 8 cents before the resistance point. If I hadn't let my emotions take over, and trusted the chart, I would've had a significant profit today.

My lesson here is to always trust the charts. Charts are your friend. Charts tell you where the support and resistance points are, which make good entry/exit points.

My other lesson here is to STICK WITH YOUR EXIT PLAN, and have a solid exit plan based on the technicals of the charts, not on your emotions. Two appropriate technical exits would've been:

1. On the $5 break, where I would've been out for a very small $50 loss
2. Only if it broke past $5.50. Yes, it would've been a larger loss, but not much larger than I already had, and I would've given myself a chance at a great profit.

While my experience here shows why you don't want to short into strength, I do NOT regret shorting this into the close, simply because shares are getting so hard to borrow now. Sometimes you have to be a bit aggressive and get in early. My only regret on this trade is my exit. I exited on emotion, rather than technicals.

I at least made up for a good chunk of the MKTY loss with my CVP short, which I shorted into the close yesterday at $3.64. CVP was very stubborn today, first trading in a $3.45 - $3.50 channel for a good chunk of the day, and then in a $3.40 - $3.45 channel for the remainder. Then, in the last half hour of trading, that channel decreased to $3.40 - $3.41. Man, this stock was being a bitch! It would not break under $3.40. Finally, in the last few minutes of trading, it fell below $3.40. I exited at $3.3764 for a $190 profit.



To add some insult to my MKTY injury, my WSCI short which I covered yesterday ended up tanking today.



Oh well. The same thing happened to GetShorty, a frequent visitor/poster on Timmay's site.

No more plays for me. I have a client early in the morning so I won't be playing anything, at least not until the afternoon.

GUTTER ACCOUNT STATS:

Beginning of month: $4856.64
Yesterday: $5894.34
Today: $5875.68

Today's loss: $-18.66, or -0.32%
Gain since beginning of month: $1019.40, or 21%

Positions traded for a loss:

MKTY (-$285)

Positions traded for a gain:

CVP ($191.40)

Playing with fire in the gutter

As I mentioned yesterday, I had to see a client this morning from 6:30 AM to 7:30 AM PST, right when the market opened. So, I put in day orders before the market opened so that I could exit my positions without me being around.

I got out of my 2000 share position of NNVC at $1.30. With an average entry of $1.32, I only lost $70. Good thing I got out at the open, because NNVC ended up dropping as low as $1.18 and closed at $1.22. It's no longer looking like the favorable chart pattern that it once did. Now, it's looking like a developing head-and-shoulders pattern.



I also exited my MWY position at $3.75 for a $310 profit. This is why the pattern day-trader rule sucks. I would've exited MWY yesterday when it was near $4, which would've given me over $100 more. But, because I was out of day-trades and couldn't risk another one, I was forced to hold overnight. Still, it was a nice 20% profit on my position.



I put in a conditional order to cover WSCI if it went past $9.75. Well, in the hour I was away, it dipped to $9, only to bounce to $9.83 where my order executed for a $48 loss. WSCI then faded and closed at $9.20.

I probably shouldn't have entered this one since I couldn't watch it in the morning. Yeah, it was a small loss, but I could've gotten out with a small gain if I had been there to watch it.



Then it was time for the power hour...the last hour of trading (I usually only make trades in the first hour or last hour of the market).

I wanted to short CHCI into the close, but no shares were available.



I also looked shorting VSE or AVR into the close, but I didn't like their price action in the last 20 minutes of trading...they were showing some strength into the close. Plus, they're both too close to support levels.





I did manage to short 800 shares of CVP into the close at $3.6412. It closed at $3.65. The chart is suggesting a big drop tomorrow. It's the first red day of a big run-up, in a long-term downtrending chart.



My riskiest play was shorting MKTY into the close. The stock had a massive squeeze today, running from $3 to $5. Normally, it's best to short into weakness when a stock goes red. However, I decided to be aggressive on this one for a number of reasons:

1. A lot of early shorts have already been squeezed. Timmay and his subscribers tried shorting it today in the low 4's and got squeezed out.

2. $5 is a significant psychological resistance point, and it didn't hold above it.

3. It's going to be tough to find shares to borrow tomorrow, and I'm not waking up at 4 AM PST just to find some. So I'm jumping on this one early.

4. Mike_13th mentioned a rumor that this was being promoted on qualitystocks.net, and Timmay confirmed that this is being promoted on lowfloattrades.com. Remember, first comes the pump, then comes the dump.

5. This stock has a MASSIVE spike in a horribly downtrending chart. As Timmay says, at some point bitter shareholders are going to sell when they realize this stock as tripled off its lows in a week, on no news whatsoever.

I got in for 500 shares at $4.90.

This stock is risky to short overnight because it's a low-floater, and could continue to squeeze higher. So, what's my exit strategy? How much pain am I willing to take if it squeezes higher tomorrow? $5.20 would be a 6% and $150 loss on my position. I'm probably not going to tolerate a squeeze much higher than that. We'll see. I'm hoping that it pulls an MWY and opens lower after a big run-up. It was down to $4.26 after-hours, but after-hours doesn't always mean very much because there's so little trading volume. However, behavior of MKTY today was very similar to MWY yesterday....morning squeeze, leveled off, spike near the close, and down after-hours.

GUTTER ACCOUNT STATS:

Beginning of month: $4856.64
Yesterday: $6086.37
Today: $5894.34

Loss since yesterday: $-192.03, or -3.16%
Gain since beginning of month: $1037.70, or 21.4%

Positions traded for a gain:
MWY $310.60

Positions traded for a loss:
NNVC -$69.85
WSCI -$47.55

Positions being held overnight:

MKTY (short)
CVP (short)

A positive day in the gutter

After my bad trade in QMNM, I made it a point to follow it up with some solid trades, and I did just that today.

First, I mentioned ZYXI as a potential short in a previous blog. However, I couldn't find any shares to borrow before the market opened. Timmay and his minions probably gobbled them all up. Being on the west coast, I'm at a disadvantage as I would have to wake up at 5 AM PST just to find shares to borrow. No thanks! ZYXI ended up as a nice short play, tanking to almost $2.80 before bouncing back up. I tried to find shares to borrow later in the day to short into the close but again, nothing.



In a previous blog, I mentioned MWY as a potential breakout play. Sure enough, MWY broke out today. I went long for 500 shares at $3.0988. MWY ended up being one of the biggest gaining stocks of the day, closing at almost $4.




I am holding this overnight, because I'm out of day-trades so I couldn't sell before the close. I have to see a client at 6:30 AM PST tomorrow, right when the market opens, so I can't watch it. I will be putting in an order in the morning before the market to sell my position at the open.

Next came DFR. DFR was a pre-hit in combination with news. I jumped in long at the open for 2000 shares at 62.76 cents. It went as high as 80 cents but couldn't break it. I sold at 76.18 cents for a quick $250 profit.





I mentioned how I took a 1000 share position in NNVC on Friday. NNVC did get some news after the market open today, announcing that they were being added to the Ludlow Biotech Index. There was a brief surge in price, and it looked like NNVC was going to break out of its consolidation pattern. Because of slow OTCBB execution, I decided to jump in before it broke out, and got another 1000 shares at $1.34. However, NNVC hit $1.36 only to fall back and close at $1.28. I'm still holding as I couldn't use up a day-trade on this one.








I wish I had waited for it to truly break out, but sometimes you have to jump in early on those OTCBB stocks. NNVC is still in a nice consolidation pattern, but I can't risk this one breaking to the downside or falling below the 50-day sma. I will check for PR's before the market open. If there's a significant PR, I'll hold my position. If not, I'll put in an order to sell my position at the open as I won't be able to watch it. If I sell at $1.28, it will be about a $100 loss for me, which isn't bad.

My final play of the day was WSCI. WSCI was a big run-up in a down-trending chart (a dead-cat bounce as Timmay likes to call it). It looked like it was about to finish red, so I looked for shares to borrow. Unfortunately, there was only 100 shares available, so I took them, and shorted WSCI into the close at $9.4545.

This is a low-risk trade for me. If I get a multi-dollar drop, I'll have a quick $100-$200 profit. However, if I don't get a drop and it starts to move towards $10, I can get out quickly for a small $20-$30 loss.

Since I can't watch it in the morning, I'll be putting in a conditional order in the morning to cover my position if the price climbs to above $9.70, which would be a 3% loss on my position.

And what about some of the other plays I mentioned over the weekend?

EFFC is holding right at 15 cents, setting up for a breakout this week, and the MACD is closer to crossing over.






GSPG broke out right before the close, although volume was weak. This one will probably consolidate right around 4 cents now.




HGLC is still holding around the .005 cent mark and is still set up for a G-Pattern.




IDAE is nudging closer to another breakout move.




FRTL broke out on good volume. I thought about buying some into the close. However, I decided not to, for a couple reasons. First, I can't watch it in the morning, and I can't set a conditional or stop order because Thinkorswim automatically reverts to a per-share commission on stop and conditional orders. The commission would kill me. Second, FRTL has already had a bunch of green days in a row, so I don't know how many new buyers will be left to come in, especially without any PR's.





Anyway, a good solid day of trading for me which put me back over the $6000 mark on my account.

GUTTER ACCOUNT STATS:

Beginning of month: $4856.64
Friday: $5526.64
Today: $6086.37

Gain since Friday: $559.73, or 10.13%
Gain since beginning of month: $1229.73, or 25.3%

Positions traded for a gain:

DFR ($248.51)

Positions being held overnight:

MWY (long 500 shares)
NNVC (long 2000 shares)
WSCI (short 100 shares)