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