This chapter begins with a recap of a couple of Tim’s trades, YOD and CNTO. Good and useful info, lot of discussion of the YOD “Seeking Alpha pump”. Seeking Alpha still moves stocks but it is not as hot as it was at the time Sykes recorded this chapter. For a while, maybe 6 months or so, Seeking Alpha was where it was at for long and short plays. But again this is useful to learn that there will always be “pseudo pumpers” and bashers. Even if true paid promotions are not as active as they used to be, there are tons of blogs, twitter accounts and message boards that can move stocks up and down. So it’s good to know that this “indirect manipulation” is still very tradeable.
Maybe a little too much time spent on it but good explanation of why and how halts happen. Good to know as a newer short seller how a halt affects you. Sure most of the time the stock will tank but if you have a large part of your account tied up you may be only able to trade small or possibly not at all until the stock unhalts. So this recap of CNTO is a good lesson.
Nit picking a little but more repeat of EKSO and CNTO, I think it is partially valuable especially in a course this long to double back and repeat. But again I know these trades inside and out, hearing about them over and over gets a little old for me.
Next up is some very detailed instruction on how and why to short pump and dumps and why it is such a high percentage play. Even if most penny stock traders will very seldom be long term shorts Sykes does a solid job of explaining that NO penny stock can be trusted, but doubly maybe triply so for paid promotions. 99.99999999% will fail.
While shorting pump and dumps has a lot of mechanical pains in the asses to it, Tim next covers how to go long early in the promotion or pump. Reminder that a lot of Tim Grittani’s huge early success came from buying into these promotions. But you need to learn to never believe and/or HOPE that the story will last long term. Or even at all, no matter what the paid promotion or article or whatever it is, if the stock is not moving, DO NOT TRADE IT.
“Every penny stock has an amazing story, but only stocks that are reacting with price action are worth trading.” – Tim Sykes
Next is more live trading on ECAU and GNIN, pretty wild to see those long term charts. But while many “guru’s” will brag about the fact that a stock went from $4 to $0.0001 Tim does a solid job explaining that there is no way you would be able to hold short for years to ride a shitty stock all the way down. You need to take the meat of the move.
One of the better and more memorable segments of one of Syke’s presentations from a pennystocking conference is the next module. Tim is fired up and funny going over a complete POS pump and dump but it very quickly devolves into a Matt Foley like success motivational speech. It also includes one of the classic Tim ranting moments when he throws his Rolex against the wall. Funny and entertaining even the second time since I was there live.
The last part of this chapter is probably the best. A very detailed and well broken down discussion of “sector rotation” in penny stocks. There is almost always some hot trend in pennystocks. (Body camera’s, Ebola, Marijuana) etc etc. And as a penny stock trader whether long or short you need to know what the hot trend of the day is and be ready and willing to buy when its new and get short when the hype fades or moves on. These hot sectors are for sure the best opportunities in penny stocks today in 2015-2016.
Very solid chapter with tons of great info.
Rating: 4 out of 5
-Seeking Alpha – Netflix of China
-Replay of webinar on long term picks – audio/video not great.
-Short pick after the fade
-Lining up technical’s and fundamentals
Live action of YOD and CNTO, but a lot of just marketing Long Term Newsletter
Discussion of random “real stocks” big names – small range
-Why penny stocks are better
To much repeat discussion of EKSO and CNTO from earlier chapters
“Every penny stock has an amazing story, but only stocks that are reacting with price action are worth trading.”
EKSO – Long
CNTO – Short
Discussion of not trusting promoted stocks – look to short them.
Explanation of CNTO halt and following gap down
Rules for shorting Penny Stock Pumps
-Look for promotional/mailers chat rooms etc.
-Promotions can last, don’t short right away
-if you are quick you can go long, but need volume and price movement
-need to be fast/early
-when volume starts to fade and promotion ends, the stock will fade/crack
-stocktips.com discussion, but promoters always change/move around.
-wait for weakness/backside don’t short frontside
As of today 1/1/2016 pumps/promo’s are not as frequent as when this chapter was made.
No problem being wrong on a short (or any trade) but cut losses quickly. And revisit.
Shorting pumps sounds great, but so much risk and high costs to try and hold long term.
Keep in mind whether you can re-short or not – sometimes its better to hold because you will not be able to get shares again.
Halt description/explanation – USUALLY holding short into a halt is huge for short sellers. But can tie up your money for a long time.
Pumps are high risk to reward but few and far between.
Live trading recaps:
-covering into a morning panic
-Beverly Hills Hotel suite tour – entertaining, but not very useful
-I didn’t remember this ticker, but WOW the long term chart is TERRIBLE.
-good commentary and L2 play by play
-to much ranting about subscribing/watching lessons etc
-Watching LEvel2 myself Sykes should have not fully covered. Looked to really crack
-Meat of the move
-Testimonials drag on
-GNIN – amazing collapse for sure
Presentation from Pennystocking Conference – 2012
-Anatomy of a perfect trade
-Interesting to see the news flow/promotion
-Good example of an $AAPL piggyback trade
-useful fundamental analysis/breaking down pump
-Jump to live trading webinar
-drags on a little but obviously need to let the stock crack. useful for new traders to see though.
Challenge/Motivational Speech from conference
-good stuff, Tim does a great presentation.
-the classic thrown Rolex moment
-With Tom McCarthy chasing it down
Shorting non pumps
-shorting higher priced stocks not as explosive but can be more replicable/consistent
-need smaller goals for non pumps. charts can pull but can’t expect huge 50% type gains
-Still predictable downside on shorting stocks that are overextended.
-Exposes/hit pieces are great for higher priced stocks, seeking alpha, citron , muddy waters etc
-DOn’t random short, wait for good entry, parabolic/super nova or some sort of hit piece etc.
Good discussion of hot sectors to buy and short – always cycling
Non pumps need to use technicals/price catalysts
-Green to red
-red to green
Things to know/understand
-Low float – Yahoo finance key statistics – -Short squeeze
-espeically Friday afternoons
-Month/quarter/year end push
-tape painting window dressing
-insider buys and sells
Short timing – 3 times
-into big morning spike
-big potential for gains, but very risky, need a tight stop and SOLID plan
-morning bounce off of lows
-short after huge drop and bounce
-red to green
-Solid risk to reward holding overnight a red stock on the first red day.
-QPSA – MEET
-Good walk through of CUBA trade
-Early short example
-wait for breakdown – LOD fail