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| Symbol | Sector | Return | Exposure | Trades | Last Trade | Status |
|---|---|---|---|---|---|---|
| CNEX | Mining | -18.33% | n/a | 2 | 13-May-08 | Prior Holding |
16-May-08
The Right & Wrong Way To Short Sell A Fraud Like Kentucky USA Energy Inc. (KYUS)
Holding Rationale for CNEX.
Yesterday, a day after failing to be too aggressive with shorting known fraud CNEX, as it plunged from $7 to $3 and my readers made thousands of dollars, I saw a morning dip on fellow pump and dump/known fraud KYUS and shorted into it, 2,000 shares at $2.37. Although hugely manipulated, it was only up $1 or so—no $1 to $7 action—but I was afraid I was gonna miss out on a possible 50 cent drop. Not only did this trade break my trading rules—wait til the friggin afternoon you lil bitch!—but I let a prior trade influence a current one. Two major mistakes, so I deservedly was forced to cover into the late morning spike, at $2.56, rubbing the typical morning fakeout breakdown in my face. So, I finished the day with a loss of $413, after commissions, now nearly $1,000 of my highs just last week.
Today, with the stock opening slightly higher in the $2.60-$2.70 range and a morning meeting to work on TIMtv, I made sure not to even consider shorting until the afternoon. Not even when I saw it tanking to $2.40, just as I was walking out the door, was I tempted to short the 3,000 shares I reserved—if I missed it, I missed it. (that morning dip turned out to be yet another fakeout)
But by mid-afternoon, while still in the studio, after some solid sideways price action barely clinging to positive on the day, I saw the stock go slightly negative on the day and I said to myself, “this is a worthy pattern to short into.” I missed the initial drop as it just fell too quickly to $2.50, but I thanked my lucky stars that it bounced right back near the unchanged mark, just as I shorted 2,815 shares (135 shares didn’t get executed) at $2.58.
Within 20 minutes the stock was in freefall at $2.42, but it couldn’t seem to break $2.41, or even get a crack at the morning low of $2.38. With some probable Friday afternoon short covering and possible further spam mailings this weekend that could cause a Monday morning spike, I decided to play it safe, covering with a $450 profit…unfortunately OTCBB executions take a bit longer than expected, so while I was confident I’d get $2.42, I got $2.45, right at my limit for a $350ish profit, after commissions, meaning I’m down like $50 on the whole.
The stock actually did manage to take out the day low and drop to $2.33, but I was also right about the Friday short covering so it finished right around where I got out… poorly played, but the game ain’t over yet. You’ll discover that while I’m dead on about how scummy these companies like are and how different patterns will play out, for better or worse, I’ve seen sooo many patterns that I’ve become a rather conservative penny stock day trader, if ever there was such a thing. So, my timing ain’t great—mostly due to a lack of discipline, meaning an inability to wait for that one simple pattern, the afternoon fade—so anybody who wants to trade these suckers, I’ll teach you about the variables and players involved and give you my opinion based on waaay too many historical examples (a few of which you can see HERE and read about the details HERE), but the discipline part is up to you. Sound good to you?
Here’s how some others who’ve adopted my strategy have fared on this one so far:
Mark matched my $350-ish in profits
TIMbucks points leader Davey pocketed $200
Rgilles made $170 the hard way
Evan made an undisciplined $250
And good ole Jeff over at EliteTrader made a cool $1k and is now up $6k in 3 weeks!
So out of the 6 of us, Jeff wins—perhaps it’s just a coincidence but he says he’s watched my PennyStocking DVD 6 times now :)
Posted at 13:11 in Holding Rationales | Permalink | Comments (0) | Top
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