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
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3 comments:
Congrats! I think the big risk of holding these shorts long term waiting for the eventual breakdown of these stocks that run up from like $2 to $7 is that if something goes wrong, it could be catastrophic.
For example, like SWIM was bought out by AMTD today. The stock went up more than $2.50 overnight. So you get more than a short squeeze, you get chopped up.
Another risk, as the market maybe is turning from long term bear to some bullish shorter term trending, it will make these stocks less likely or slower to tank.
Anyway, I think you are right, many of the stocks that Tim shorts or has on his list, when he gets out right away with tight risk management and stop losses (which in general is a good strategy), eventually even though they may run up more (like XTXI today), they typically fall eventually. It will be interesting if this strategy works out long term.
Hey Charlie G.!
Thanks for the comment. If I hadn't watched pretty much every stock Tim has pointed out (that has gone from $2-$6ish in a relatively short amt. of time) over the past year or so, I wouldn't be as confident. I would never 'think' about shorting Think or Swim, as it doesn't meet my parameters (not to mention I really like the company and sadly thought a buyout would one day happen). I do hope TOS stays the same for as long as possible. If not, I'll probably try out IB.
Oh yeah, Tim has always said his strategy works even better in a bull market. I guess we'll both find out one of these days.
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