Watching Paint Dry

In case you're wondering, I'm still short 300 Shares of MAXY (and still have my GTC order to cover 200 shares at 7.90). It is down trending nicely (even if it's slooooow). There are a couple 'bearish' technical indicators that look promising at this point. I wouldn't even know where to begin to try and explain technical analysis on this blog (and don't have the time or the energy), so I'll just use links to the terms I'm referring to and charts to better illustrate my theories ('theories' meaning that I welcome other opinions). Below is a chart taken from Yahoo! Finance and given the once-over in Microsoft Paint. I've only added black lines to show the first bearish indicator of 'down trending' (when a stock makes lower highs and lower lows). The second indicator is MACD. You'll notice, if you click here and read the Wikipedia definition, that when the MACD goes below zero, it is a bearish signal. This seems to be about to happen to MAXY even though the price has held it's ground.



GERN is my next target, thanks to TIM for bringing this stock to my attention. Stem cell stocks are 'in play' right now (meaning this sector is pretty much en fuego, being both volatile in price action and volume). It reminds my of the late '90s tech boom, when every company (penny stock or not) associated with the Internet was blowing up (as detailed in Timothy Syke's book- An American Hedge Fund). Thanks to the new Obama Nation (abomination?), stem cell research has been given the green light. I would love to see a true 'Supernova' (see last year's stocks PDO and MXC for supernova-type price action) come out of this new 'gold rush'.

Happy prospecting,

Evan

Secret Agent vs. Trader

So my sister's wedding was this past weekend (she made the most beautiful bride ever!) and, being one of the groomsmen, I rented a tuxedo. One of the co-workers from my night job happens to be in design school for photography. Tuxedo...Photography. Was it even a question as to whether or not I do a James Bond photo shoot?



Yeah, I'm a pretty big fan. You know it's bad when I commited to 6am for the shoot- the morning after the bachelor party! The more I thought about what my next post would be (while waiting for MAXY to tank), the more clear my answer got- Compare the similarities of the world's best spies to the world's best stock traders:

1. TRAINING

In order to be the best at something, you have to be willing to make whatever sacrifices necessary- especially in the beginning. For undercover operatives, as well as all branches of the military, this starts with boot camp. Strict workout regimen, diet, and mental training begin to shape the individual into a soldier fit for battle (though the battle has not yet begun). With traders, this begins by watching the markets, reading as much material as your brain can handle (which isn't much at first when it comes to finance books), and paper trading.

2. DISCIPLINE

Without discipline, it is impossible to succeed long-term. As a spy, lack of discipline and focus could mean your life. As a trader, without discipline you may as well blend your money into a smoothie- jumping in and out of trades due to boredom or 'gut-feelings' is the quickest way to financial ruin.

3. STYLE

That's right- Style! James Bond has that certain 'something' that makes him unique. He's charming, British, likes his drinks a certain way, and loves to say his last name first. His style is evident within five seconds of coming across one of his 22 movies while channel surfing (Well 21 since Quantum of Solace isn't on t.v. yet). As a trader, you have to find that certain 'something' (most often referred to as a 'niche' trading style) that works for you (ie. is consistently profitable). Maybe your great at trading day-rangers like Muddy or shorting hyped penny stocks like Timmay. All I know from about a decade of trading (which spans countless profits and losses) is that your style is just that- yours. Simply following others' trades isn't going to cut it longterm.

Enjoy the weekend,

Dawson...Evan Dawson.

MAXY PAYNE

Since Max Payne (the movie, starring 'Marky Mark' Wahlberg, adapted from a popular video game series) was released this Tuesday, I thought it only fitting to tie it to this post. Below (left)
is a perfect representation of the scowl I had today while viewing MAXY's chart (right).

I was working during market open (as usual), and failed to see MAXY trading under $8. When I texted my Mom (because my brother-in-law is traipsing around Jamaica on his honeymoon) at 10:10am and asked "Maxy tankin' yet?", she responded with "8.19" at 10:30am. Great, I'm thinking- it's gonna test $8 again, and this could be the straw that breaks the camel's back. Little did I know, MAXY had opened under $8!
Low of the morning shows $7.77. I would have loved to have been alerted (better yet at home with my finger on the 'trade trigger') when it was under $8. I would have probably covered the same 100 shares I've been profiting on while MAXY decides when she'll crack- but alas, in light of Sir Tim's 'transparency' post, who knows what I would have done. That's all 'woulda, should, coulda' talkin'. I do know this- I've placed a GTC (Good Til Cancelled) order on Think or Swim to cover (buy) 100 shares with a limit price of $7.90 (just in case it breaks $8 again in the near future and I'm not able to witness it).

I'm still completely at ease with my outlook and forecast for MAXY, I'm just wishing I could have ridden the 100 shares for another round. I need to seriously start thinking about buying an iPhone so I can use the Think or Swim application ThinkPod on my lunch breaks.
Charlie G. alerted me to this (potentially $200) idea. I guess surrendering to Apple is inevitable, like MAXY's test of $8 this morning. Scowl.

PALM Reading...

No, I don't personally condone or endorse palm reading as it relates to fortune telling, soothsaying, etc. I'm interested in the ticker symbol PALM as my next possible short. Darkside Trading, using Muddy's incredible scans, alerted me even before Timothy Sykes this time (probably because it wasn't up enough yet for his risk/reward ratio). I texted my Mom (who was way more available than my future brother-in-law Eric this morning considering he marries my sister Sunday) to short 200 shares of PALM if it surged over $9.

Let me just start a completely new paragraph here to comment on one of Timothy Sykes's posts (since it relates somewhat to me telling you that I texting my mom this morning). Tim is very transparent on his site about all his trades, most of his financial information, and even his extracurricular activities. I've been able to learn a great deal from him because of this. In this post of his (disclaimer: He can be eccentric at times and it shows in his writing:), he slams those who are less transparent. I don't blame him- he's had so many people (most of the time with anonymous or fictitious names) leave degrading comments on his site that the only way his business model works is by being an open book. I feel the same way, and want to set the (my) record straight:

1. I began this blog because I thought it would be really cool to detail my trades like Tim and many others. It would help me learn from my mistakes while I try new strategies while I slowly get the word out about the mission trips (which will definitely happen as time permits).

2. I am not claiming to be a stock guru. Trade at your own risk and learn from my mistakes with me. I view my trading as a supplemental income, and will probably never be able to live on the profits of day trading- that takes the kind of time/money/dedication very few are fortunate to have. My primary goal is to make enough to fund one mission trip/year (they usually run anywhere from $2000 - $5000 for a two week trip). My most recent was to the Amazon, where I took a picture of me reading Timothy Sykes's 'An American Hedge Fund' on the river- my two passions: Missions and the Market.

3. You'll see various ads on my page powered by Google's Adsense and hopefully some from Amazon (linking to books that have helped me learn to trade) and Tim's site in the future. I'm not suppose to urge you to click on them because that breaks the contract with Adsense, but it is the only way (and trust me, the revenue is extremely minimal at this point) I know how to make money from writing this blog- which isn't my goal but it's a nice 'extra'.

4. As I've said, I work two full time jobs (Target from 6am-2:30pm and Living Word Christian bookstore from 3pm-9:30pm five to six days a week). In order for me to have this blog, it takes sacrifice (usually posting on breaks at work or drafting half before I go to sleep and half when I wake up). The human body is simply amazing- and able to be pushed far beyond what we think possible. Unfortunately, like the stocks detailed on this blog, sometimes I crash.

5. I have opened a Covestor account under the name islandminister, and will be adding Think or Swim as the account's broker in order to let the world view every trade. I do have accounts with Raymond James and TD Ameritrade as well, but they only hold my IRAs and mutual funds (whose performance, needless to say, have been less than stellar over the past two years).

That's pretty much it- oh yeah, MAXY failed to crack $8 again, but is still downtrending nicely (lower highs and lower lows).

Have a restful weekend- I'm off to the bachelor party!

Evan

Picture Perfect

What a great day for this Sykes/Swing trading strategy! As mentioned in my previous post, I'm eagerly anticipating MAXY to break it's $8 support level. Today marked it's third attempt and, despite my previous 'Third time's a charm' wishful thinking, third failure to crack $8. When it couldn't break support after multiple attempts (as evident by today's chart below- courtesy of Yahoo! Finance), I decided to cover 100 shares.


To help you understand why I only covered 100 shares instead of the full 300 (already profitable) shares, here's a fairly detailed time line of thinking and text messaging to my broker (aka. future brother-in-law Eric who happened to be home with Think or Swim's software open:)

Text to Eric (10:01am): Maxy?

Text to Evan (10:15am): Down to 8.10

Text to Evan (10:23am): Low 8.04 back to 8.10

Text to Eric (10:38): Cover 100 under 8.05 if it gets back

Text to Evan (10:45am): Covered 100 at 8.05

I knew that MAXY was flirting with $8, and hoped it would break it- but when it didn't, I opted to play it safe (fearing another spike after another failed attempt). I figured (and this happened to be correct) that I could cover a portion of my shares, lock in some profits, and re-short the same 100 shares at a higher price if it bounced off support (like it did). My re-short of 8.47 basically happened because it was late in the day and I had the option to average up my short position. Below is the screenshot of my Think or Swim account's trading history over the past week to confirm. Could tomorrow be the fateful 'dip into the $7 range' day for MAXY? Stay tuned...


Happy Friday Trading!

Evan

Oh MAXY, you card!

Whenever I can, I like to check in on my stocks during actual trading hours (extremely rare occasions with two full-time jobs- another reason why this strategy works well for me). When I opened Think or Swim to check in on MAXY around noon, the 1 minute chart (basically showing yesterday's close and today's action so far) made me laugh out loud. The chart below wasn't altered in any way (use any online chart to confirm), and clearly shows MAXY bouncing off 'my' support level. That's right, MY entry-price $8.33 level of 'support'.


Feel free to comment and let me know how many of you have experienced this lovely type of coincidence before- when you're certain the entire market (at least the penny stocking world) is after you;) Really, I didn't know my 300 shares were such a force to be reckoned with. Needless to say, at this precise time (1:28pm 1/14/09), MAXY is still down trending toward the $8 psychological support level (after a 'watching paint dry' full hour of sideways price action at $8.65). This next attempt will mark it's 'third time's a charm' testing of $8.

Content staying short,

Evan

Mission Accomplished: HSNI

I've completely closed my HSNI short by covering the last 50 shares at $4.84. Below is a screenshot from Think or Swim showing the exact time of my fill, as well as the total P/L (profit/loss) for HSNI and running P/L for my short-in-progress MAXY.

I have to say, this stock couldn't have reacted more perfectly. Here is the progression from rise to fall (feel free to click here to follow along with the 3 month, Yahoo! chart):


1. Stock had dropped to $1.50ish in early Dec. (just a bit over a month ago)
2. After breaking out of numerous resistance ceiling's (mostly around the $4 range), volume spikes (and no doubt some short-covering) helped to push this over $6 (enter my initial short), then $7.
3. Volume began to fade along with the stock price.


This one really was that simple. I documented my thoughts all along the way with this blog, even saying that I would cover in the upper $4s. I was surprised it happened as quickly as it did, but said all along it was inevitable. After commissions ($45) my total profit for HSNI was $403.52. Not bad for two weeks and what I'd call a no-brainer play. Below is an example of a 5-day chart any short loves to see.

Thus concludes my celebrating. I'm out to find the next short (Thanks to TIM for finding HSNI) while waiting for MAXY to fall. I'd love to hear any thoughts, critiques, and/or questions on this trade.



Thrilled at my strategy's first big confirmation,



Evan

Can you say 'Afternoon Fade'?

Talk about a textbook technical breakdown late in the afternoon ('fade' is the term I'm now accustomed to thanks to Timothy Sykes)! You'll notice in the chart below, that when our dear friend MAXY (please note that as of right this second- 6:44pm on 1/9/09- I have absolutely no idea what MAXY represents, the company's history, etc.- the fact that both TIM and Darkside originally mentioned them got me to watch the chart, nothing else) broke through the LOD (low of day) of 9.20, it was off to the races.


I'm still short my original 300 shares, having entered at 8.33 (if you're new, my strategy won't let me cover until a trade's profitable). Notice that the lovely AH (After Hours) price of MAXY is one cent above it's high for the day? Can we say 'manipulation'?

HSNI is slowly fading into oblivion once again. I'm still short the 50 shares I plan on covering somewhere in the $4 range.

XTXI (again, have no clue what this ticker symbol even stands for) tanked early on, so I didn't short as I'd planned if it had spiked early in the day. You're welcome to click here to see the XTXI's chart. Be my guest and click the 1 month chart to view the stock's meteoric rise. What goes up...

Enjoy the weekend,

Evan

One Down, One to Go...

I've officially covered my HSNI position for a profit of about $350 so far (I say 'so far' because with so much downside potential still left in this stock, I opted to keep 50 shares short- which I'd like to cover in the $4 range). I could explain it all in detail, but I'll let this Think or Swim chart that I've used good ol' Paintbrush on, along with my past few posts, to do it for me.


You'll notice I covered for a small loss on the 26th once it broke out above it's 6.40ish high from 12/23/08. I still used solid technicals, but overall I still believe it doesn't matter all that much- 'certain' penny stocks that have gone from $2 to $7 (as I've learned from TIM) will settle back down if you can ride out the short sqeezes that can occur. I'm very pleased with this outcome on HSNI and first confirmation that my strategy is sound. Taking my emotions out of play and simply relying on time/technicals to do my work for me is such a relief- and profitable.

As for MAXY, the volume continues to wane- giving me the impression that the end is near. We shall see- if it continues to climb and test it's previous $12 resistance, I could be short my 300 shares for a bit longer than I'd hoped. Regardless, I'm sitting on a pile of cash courtesy of the Home Shopping Network (HSNI) that I'll use to short the next victim. I don't see anything that fits my strategy's description just yet (aside from XTXI which I may short on a morning spike tomorrow), but if there's two things I've learned trading that I've yet to master, it's 'don't force a trade' and 'don't enter a trade out of boredom'.

May your next cover be a profitable one,

Evan

Patience Pays!

At this early stage of my blog, I'm not sure how many people are actually following my trades, but my potential profits are climbing even as I type (10:55 am EST 1/7/09). If the page views have been affected by you (and not just me making sure I posted something correctly), then you may know I'm short HSNI and MAXY.

I haven't posted since revealing my short positions because I haven't made any trades...until this morning. In the future I'll try to do better at mentioning my day-to-day thought process while watching the volatility in the stocks I short. For now, just know that my strategy (short stocks that have run too far too fast, had their first down day, and wait until the position is profitable to cover) is holding strong. Watching HSNI continue it's uptrend after the first down day (12/24/28) of it's initial run hasn't been what I'd call pleasant- but patience is the key. Below is a 5 day, Think or Swim chart of HSNI I took a screen shot of this morning. Notice that I covered 150 shares at 9:45 this morning (a profitable trade from my 150 share short at 7.20). I still have the original 250 short that I'll look to cover for a profit at a later date (unless of course it completely tanks this afternoon).


My reason for covering 150 of my 400 shares was fairly simple- I had a profit from those shares, the stock opened in near free fall once the volume picked up, and it hesitated around 6.73 longer than I was comfortable with. Covering 150 shares gives me two options: Re-short the 150 if HSNI retests it's 7.50ish high and fails, or cover the remaining 250 at a lower price should it continue to fall (as I'm typing, it has recovered to 6.84- the time is 11:18am EST). Looking at the above chart, you may be wondering why I wouldn't cover the whole amount somewhere in the $6 range. If that chart representedw more than just a few days, I'd agree with you (though I wouldn't have shorted after such a small run). If you take a look at the 20 Day chart below, you'll see that HSNI has quite a way to go before retesting any yearly lows.


I'll wait to post any charts of MAXY until it shows major signs of weakness. When it eventually breaks through the mammoth $8 support, things should get both interesting and profit forming. For now, it's creating new highs (though none to write home about).

Please feel free to comment and ask any questions (about the charts, strategy, missions, etc.). I'll be posting about future mission trips and projects as they emerge. I'm seriously thinking about taking a team to the Amazon and partnering with this ministry in the summer of '10. It would be great to profit enough from trading to fund that trip (costs about $3000 for two weeks, including everything from flights to bug repellent).

Patient Trading,

Evan

Happy New Year!

This year begins with two open short positions- HSNI and MAXY. If you've followed either of these stocks over the past few weeks, you know that being short hasn't been very profitable...yet. If there's one thing I've learned from following the technique of Timothy Sykes, it's that everyone of the stocks he deems worthy to eventually short always end up lower. I'm not kidding- virtually every single stock (exception being the ones he's recently spotted as short setups) would have made you money had you stayed short long enough. Even 2008's most notable 'supernovas' such as PDO, MXC, and NTI (and others that looked like freakish, moon-bound rockets) all stalled over time to trade at prices below Tim's initial spotting. So what's the point? Simple...

I will hold these positions until I cover at a lower price. I'm short 400 HSNI average price 6.95 and 300 MAXY 8.33. I've watched too many stocks falter just days after covering for a loss or reading how others kept getting squeezed. Now if the stocks were just chosen at random, this would be an extremely risky and foolish thing to do. Having first seen these ticker symbols on Darkside Trading and Tim's Site, I'm well aware that they are the product of manipulation. Now the way I see it, there are three scenarios that could unfold with each of these stocks. The first (and hopefully correct) theory is that both will tank this week passed my initial entries, funding my account instead of draining it should I cover prematurely. The second is that these two stocks are far from being manipulated, shorts will continue getting squeezed daily, and the culprits will climb to nose bleeding heights before meeting Mr. Newton and stalling out (along with their precious volume). This would be unfortunate, since I would have to tie up my capital and potentially miss other great setups. The third and final occurrence I've witnessed in these types of stocks, such as the previously mentioned NTI (a Superman pump now known as NTIC), is where an accumulation period transpires during what I call the 'calm' before the 'pop'. A stock 'everybody knows is doomed' seems to just hang in a narrow channel, not really giving any chance of escape to either longs or shorts (hence- MAXY, with the exception being the $1 drop on Tuesday). In all of these scenarios, the final outcome is clear- the stocks eventually go lower.

Since my schedule (two full-time jobs) prohibits me from trading most days, I've had to sit by the sidelines while others shorted the monsters. I was able to reserve and short CNEX on that beautiful fateful day last year when it dropped more than 50% because I happened to be off. Like countless others, I could have been early a few days and still made a decent profit. Heck, I could have shorted both PDO and MXC around 15, watched them go to 30 and 50 respectively, and covered tomorrow for decent gains. The only problem, for obvious reasons, would have been tying up capital.

Basically, since my emotions and psychological issues during the 'heat of the trade' sometimes hinder my profits, I'm taking both out of the equation. I will stick to basic rules I've learned from hanging around the 'Dark Gift' masters: find a stock with a decent, short-term jump- say from $2 to $6-$8, wait for the first down day (which HSNI and MAXY have had), and stick to my trading plan (which happens to be disable the 'cover switch' until a 'gain' unlocks it). Any thoughts?

Happy '09 trading,

Evan