Trading Like 007

If you remember THIS post, you know I'm intrigued by the spy genre (borderline 'obsessed' around the time a new Bond film releases). While watching the newest 007 installment, Quantum of Solace (for the second night in a row...really, what's wrong with me?), I couldn't help thinking about how his life relates to stock trading. In almost every adrenaline-filled, pulse-accelerating situation, his training seems to summon 3 distinct reactions: He looks before he leaps, takes calculated risks, and always protects his assets.

Look Before You Leap

There are countless scenes, especially with the new, physical Daniel Craig, where Bond has to make a split decision. The consequence of that decision could prove fatal, had he not been

trained by MI6 (British Secret Service) to react quickly and decisively in life threatening situations. Any Bond/Bourne fan can recall countless times where a jump from a window, dive into/onto a moving vehicle, etc., was made only a spilt second after the protagonist saw his opportunity. Keep in mind, it's part training, part instinct (Not everyone can be trained to be an effective assassin).

There is a direct correlation to trading stocks. In the heat of the moment, it's all too easy to jump on board a skyrocketing ticker or hit the buy button in order to catch a falling knife without really knowing what you're getting yourself/money into. This is happening all too often, now that some trading platforms allow traders to (almost blindly) follow the trades of others. There are known traders such as Timothy Sykes, Investors Underground, and now Reaper, who have many followers/leapers/minions doing just that- following their trades without looking. While they may be lucky enough to begin that bonehead practice with some gains, it just doesn't work long term. They must know what they're looking at/for in order for their leaps not to completely ruin them.

Take Calculated Risks

Bond learned a hard lesson in Casino Royale when he was wiped out during a game of Texas Hold 'Em-style poker. LeChefre, the film's main antagonist, had fooled 007 by faking a tell (Manuerism that let's your opponent know whether or not your bluffing). Bond in turn goes all in, and subsequently loses his entire bankroll (To be accurate- the UK's bankroll).

Being able to properly manage your trading account's risk, or % of your total assets you trade with in a given order, is a make-or-break ability- which can and most certainly should be learned. I can't tell you how many times I've heard (and let's be honest, I'm guilty of this myself) someone say this type of sentence, "That one trade wiped out my entire week's/month's gains". Knowing how much you're willing to lose before ever leaping into a trade is a calculation every trader must know for himself/herself. Furthermore, one must be willing and able to execute an exit order if that threshold/risk level is reached.

Protect Your Assets

No matter what situation Bond finds himself in, he always manages to protect his most sacred assets: loyalty to her majesty, and himself. At times, he's forced to leave women, friends, Astin Martins, etc. behind so he can live to fight another day. Also, he seldom allows

himself to lose sight of his exit strategy simply because he's in the heat of battle.

With stocks, it's important to stick to your trading plan unless outside forces put your assets at risk. As you've probably noticed by now, the 3 qualities of a good secret agent and stock trader are virtually interchangeable. By looking before you leap, you're calculating your risk and protecting your assets. By protecting your assets, you are assuring your ability to take the next leap, and so on and so forth. Learn from the qualities that have kept James Bond from succumbing to the 90% mortality rate of other 00's.

Never wanting to be among the 90% of traders that lose money,

Evan (aka Island Minister)

Don't Fear the Reaper

As most of you know, I've been following Timothy Syke's trading style for almost two years. I first saw him on Wall Street Warriors (Mojo HD network show about various traders/investors) a few years back, and enjoyed his brutal honesty and knack for profiting from penny stocks. Here's a pic of me reading his first book, An American hedge Fund, while on a mission trip to the Amazon region of Brazil last summer. His trading abilities are only trumped by his business saavy (as he's currently growing an empire built on stock alerts, DVD and book sales, and even a publishing company called Bullship Press, LLC). Needless to say, his ship has sailed and, to most penny stock pros, needs no introduction. As for the title of this post, I introduce you to Michael Goode (aka Reaper), a padawan/apprentice of Master Sykes. I began shadowing Reaper on various trading sites such as Tim's and Investor's Underground. He always posted intelligent questions and comments, and his increasing profits could not be ignored (he's even been featured in some of Tim's posts like THIS ONE).

I'm pleased to say that Reaper himself has built a very nice looking website (Pallian would be proud ;-), and posts a well researched watchlist and ongoing video teaching series. Lucky for us, it's FREE (well, for now at least). below is a video from just a few days ago where he not only confidently explains the technicals of VG (Vonage), but also correctly predicts the following day's price action. He was dead on, and I'm excited to continue my own apprenticeship under this up and coming Master Trader. Enjoy the embedded video (very informative once you get passed his music preferences), or click HERE to check out his site (and don't forget to buy him a cup of coffee using the link on the right-hand sidebar of his homepage).


Successfully merging Blue Oyster Cult and Star Wars references,

Evan (aka Island Minister)

Web 2.0

"Web 2.0" refers to web development and web design that facilitates interactive information sharing, interoperability, user-centered design^[1] and collaboration on the World Wide Web. Examples of Web 2.0 include web-based communities, hosted services, web applications, social-networking sites, video-sharing sites, wikis, blogs, mashups and folksonomies. A Web 2.0 site allows its users to interact with other users or to change website content, in contrast to non-interactive websites where users are limited to the passive viewing of information that is provided to them. Thank you Wikipedia :-) For the full definition, click HERE. (I've left the links in just in case you wanted to look up the things Wikipedia assumes you might want to look up)

So why am I even taking time to post about Web 2.0? If you're into stocks, finance, missions, cooking, whatever- technology WILL NOT WAIT FOR YOU! I've found out the hard way sometimes, since I'm usually a laggard when it comes to hopping on the bandwagon (ie. Facebook, Twitter, etc.) Whether you're trying to figure out how to access Think or Swim from your iPhone, or wondering how to embed an RSS feed into your website- you need to keep up! This brings me to my next point (and thanks to Charlie G., who unfortunately for us has taken some time off from blogging, I know I'm not alone in my thought process):

Stop being lazy! This not only goes for your trading, but EVERY aspect in your life: physical fitness, diet, relationships, education, etc. I've lost my night job recently at a Christian Bookstore because of a little thing called bankruptcy, and have found myself with more time than I know what to do with! Since I began seriously trading and investing for mission trips almost two years ago, I've wanted to have more time to devote to these two passions. Well, my mom always says, "Be careful what you wish for". Now it's game on! I have the time, so let's see what I'm made of. I built some exercise equipment yesterday (one big piece with dip bars and a pull-up bar), and have been working on my ministry website (it's actually a small business that uses t-shirt sales in order to fund youth mission trips- I've just been neglecting it for years).

I guess what I'm trying to say (if anyone is still reading at this point :-), is that there's no better time than the present to pursue your goals- but it takes work, patience, and perseverance (no, I did not get that from a fortune cookie). Web 2.0 pretty much personifies what I'm talking about. There are people building empires using the new social networking sites and tools anyone reading this blog has access to. I'm serious, now matter what your passion is, it can be enriched by the computer you're using right now! I'm well aware that most of my readers are traders and investors in the stock market- use the new tools available on the web to quicken your learning curve. The other day, JEDM was in play and went supernova- small fortunes were made. You know how I heard of it? A tweet from Timothy Sykes I saw come across my Facebook home page.

Now, I'm not saying everyone should be a web 2.0 junkie and have a blog, tweet all day long, update their Facebook status hourly, and/or get rich from building numerous websites full of ppc (pay-per-click) ads. I just know it's enriched my life. Feel free to share any new ideas or apps you find helpful from the wonderful, widget-filled world of Web 2.0!

Waaay too much time on my hands,

Evan (aka. Island Minister)

Back from the Motherland and Still Bearish!

I'm back from the mission field, newly engaged, and still waiting for the market to correct itself. My last post taught me a valuable lesson- NEVER CALL A TOP! For a while, though, I looked like a genius- the DOW retraced to 8200 before the current rally ensued. I'm not calling the top, but definitely agree with THIS article. I understand debt (my knowledge on the subject has increased exponentially along with most other Americans the last couple of years), so I know there has to be some sort of reckoning for the carelessness of both the private and public sectors over the past few decades. Again, THIS Seeking Alpha article is pretty good at nailing the details.

Thanks for the prayers and e-mails many of you sent me last month while I was away. Here's a pic of my fiancee and I, at what we hope will the location of our wedding. As for the mission trip- it was FANTASTIC! You're welcome to view all the pics HERE, as well as THESE pics from Paris (where I proposed at the Eiffel Tower). I've been working on the Island Ministries website since I got back (that's the company I started to help fund youth missions), and plan on putting a team together to go down the Amazon next summer. Interested? You can see pics from last year's Amazon trip HERE. I've also added a cool 'Tip Jar' type of application to my main trading SITE. For $5, anyone can advertise their wares. Timothy Sykes I 'aint (He's made about 50k trading in just under 2 years, and hundreds of thousands from Ad revenue and selling his products), but every little bit helps:-) As for the following video, all I can say is this- you have to be able to break loose sometimes. I thought about titling this post 'Michael Jackson's Alive and Well in Zimbabwe', but I thought that might be in bad taste. Enjoy!


Learning new tricks every day,

Evan (aka Island Minister)

Three Things

1. Timothy Sykes Isn't Human.

There are traders, there are robots, and there are trading robots. Then there is Mr. Sykes. Somehow, he not only knows how to profit more than 90% of the traders out there, but he possesses a machine-like quality that seldom lets his emotions interfere with his trading plan. Perhaps this is due to the well-known lesson he learned after losing more money than some people make in a lifetime on one penny stock (It's all in his original book). He has turned a pretty surreal corner, and is now living the daytrader dream. Some people scoff at others' successes. I applaud. Now if I can only trade the perfect setups I've learned to spot from this cyborg mentor (while keeping my emotions and theories in check), I will no doubt reach that upper echelon of elite traders. I'm still coming for you Tim!

2. I've Had a Livermore Experience.

After recently watching Think or Swim liquidate some of my positions against my will (due to lack of funds and the use of margin, I had 200 shares of both LULU and PALM covered for me the last two days), I have once again regained the hope of victory. What is victory when it pertains to trading? Planning your trade and trading your plan. It's that simple. If you're wrong, fine- but don't keep having to learn the same lessons over and over because you somehow fail to allow yourself to change your trading habits. If you build a fortune, then squander it like Jesse Livermore only to build it again- Stop there! Evaluate what got you back on that plateau, and KEEP DOING THAT! In case you're interested, THIS is one of the best short biographies on the life of Jesse Livermore I have ever read.

3. I Am Planning My Next Mission Trip!

Yep- I've saved the best for last! I am finally going back to East Africa (Zimbabwe, Rwanda, Mozambique, and possibly Tanzania) this summer. I won't be alone either- my girlfriend Michelle and I will be flying over to meet a pastor friend of ours (Agatha Taylor- special lady who loves the Lord) and help train local pastors in kids ministry (Michelle's and my favorite), education, and help with various medical needs (malaria prevention, AIDS awareness, etc.). Michelle is a pharmacist, and returned recently from a mission trip to India. She truly is a woman after my own heart. Please keep the trip in your prayers and I'll try to post updates (although not too much since this site is primarily about the trading- Mission-trading.com will eventually have more about the missions).

Striving to stay focused in this break-neck-speed life,

Evan

Swingin' Aint Easy!

     Well, in case you're wondering, I'm still short PALM and LULU (which at this second is a profitable position- just don't blink). LULU was a great short after it's first down day (yesterday). Too bad I didn't have the patience to wait for the price action- nooo, I had to try and 'pick the top' (last Wednesday) and enjoy watching one of my largest share positions of 2009 just keep going, and going...(away from me). Technically speaking, there were many reasons why I shorted LULU (and am still short). RSI was above 70, more than 100% run in one month, etc. If I had just waited to short until today, I would have had a nice in-and-out trade. More importantly, I would have my funds freed up for other positions- like my new found best friend CZZ (thanks Tim). Behold the unsuspecting beauty:

 

     CZZ is currently higher than this 3 month chart (around 4.70). The goal tomorrow morning is to cover my LULU short (gonna be tough to not hold longer- but I should be forced to only take a small profit because of how lame my entry was), then use the released funds to short CZZ, IF:

1. I can reserve shares (will try 400 and only short 200 at first)

2. It gaps up and surges over $5 before 10am

     That's it. Any variations of the above plan and I go back to bed (it is my one morning off all week- btw, why am I still up- it's 1am!)

Watching the Futures Tank,

Evan

ps- It has been brought to my attention that I use trading terms sometimes without explaining them. If you have any questions whatsoever, feel free to e-mail me or post a comment (just know that I don't claim to be a professional- but will help steer you in the right direction if I can).

How I Sleep at Night

     I received a pretty cool comment the other day from Yngvai, a trader I've been following for a while now- from his posts on Tim's site to his own blog. It was short and sweet: "Dude, you're the king of holding long term shorts!" I'm well aware that, over the past couple of years, it has been easy making money going short. Now (in the midst of this rare rally) the hoopleheads (a not-so-nice term coined by the character Al Swearengen in the HBO series Deadwood) on Yahoo Finance like to point out with great vigor, that we have seen the bottom and are on our way back up. Maybe. If so, holding shorts 'wouldn't be prudent' (Dana Carvey doing a G.W. Bush impersonation). I sleep well at night tuning out all the noise and using what little technical saavy I possess. Below is a longterm trading range of the Dow, and why I think (along with many other technical traders) we are currently experiencing a bear market rally- and possibly about to head back down to 5000.

For my 401k and IRA's sake, I hope I'm wrong and this rally never ends. With this account, though, I'm perfectly content staying short PALM and MAXY (and long FAZ- a short-minded etf).

Thank you and goodnight!

Evan

Mission Accomplished: PALM

So here's the deal- I've held PALM for a while now, and felt comfortable covering my last 100 shares today as the market was tanking. It may not have reached the levels I was hoping for, as evident in this post, but I'm not so sure we aren't on the verge of a major, market-wide rally. I'm sure you're all aware of the M2M and uptick rule discussions, and we've fallen pretty hard and fast lately (though I know technicals still aren't looking very pleasant). I could be dead wrong and we're headed much lower (I can't begin to guess at what the big guys are discussing in Washington and New York), but I have a gut feeling a correction's coming. Either way, I made two plays I feel confident about today. If PALM goes lower, so be it (missed money is better than lost money), but if the market rallies, I'm sure tech will rise with it (even a stock like PALM, who many, including the not-so-silent TIMMAY), feel is headed much lower. I can always re-short, should PALM get up around the $7.50-$8.50 range.

My other trade today was, well...patriotic (that's stretching it a bit). After my recent close call with FAS, I've become very interested in his ugly step brother, FAZ. Bryan and Muddy's comments on my last post were definitely pondered, and I decided to short 35 shares of FAZ at $95. FAZ is pretty much the opposite of FAS- it is a 3x bearish-on-financials etf- wait...is my shorting this kind of like a double negative? I had a chance to cover for a small gain when FAZ fell to 93ish, but really didn't want to use another day trade (Since I have off three mornings next week to watch the market- Woohoo!).

1. Not using scared money (only short 35 shares of FAZ- of course, if it goes to $350 like the hoopleheads over on the Yahoo! message boards are saying...) and 2. Monitoring the price action,

Evan

ps- I'm on Twitter now, and you can see my Covestor-verified trades during the day (if I make any) over on the right in the green box. Also, in case you didn't know, you can scroll through my posts on any of the stocks I'm trading by typing the symbol in the upper left search bar of Blogger.

That Old Feeling

     My Strategy's 2009 results (so far) would indicate that I may be on to something. That being said, I've been tempted lately to stray off course, and resort back to the types of ideas and trades that never used to pan out so well. Take for instance FAS. This etf (exchange traded fund) is pretty much at all time lows. Simply put, (from Yahoo! Finances) "it seeks to replicate, net of expenses, 300% of the daily performance of the Russell 1000 Financial Services". Here's the chart of FAS (or 'Forget Any Strategy') since it's inception:

     Looking at the last two years (and the wonderful debacle the financial world has found itself in), one may tend to think these 3 things about FAS:

1. It has to have either hit bottom, or come dangerously close. I mean really, how much farther could it drop- it's like $4 now, after being above $50 not too long ago.

2. Man, if I can buy a couple thousand shares Monday, it's sure to reach at least $6-$7 within the next few trading days with all it's violent swings- and I'll look like a cyborg on Covestor!

3. This is the easiest money I could ever make- I'll be able to pay off that credit card debt I got from purchasing every Timothy Sykes DVD!

     The catch is simple. FAS (and the market as a whole) could continue it's slide for the next 6 billion seconds (didn't do the math on that). No matter how 'Candy from a baby' this trade may appear, you'd be basing it on what? Gut feelings, the market 'owes you one', it's in play because Muddy's running a contest on it? (Btw, my guess for that contest, found here, is $7)

Fighting every urge to 'gamble',

Evan

Mission Accomplished: ANDS

     No, this wasn't on my 'Missions Briefing' watchlist- it happened way too fast! I was alerted to the stock ANDS by this post on Timothy Sykes's site Thursday evening. Since it didn't meet all the criteria of my strategy yet, I had no intention of shorting- until Friday's price action changed my mind. Morning spikes on stocks that meet most of my strategy's criteria (this one fits the bill except that it hasn't had it's first down day yet) are great to ride back down. Since I was working all day and couldn't watch the chart, bid/ask, etc., I texted my mom early on so she could try and reserve 150 shares with Think or Swim in case of either A: morning spike, or B: afternoon fade. She texted back with, "What price?" I instantly knew the broker had located the shares and wanted to know the price in which to short, but I wasn't ready. Not able to call my mom, I just decided not to answer (She would never enter a trade on her own, even though she's pretty good after a year of listening to me and reading Tim's posts on stocks I'm in). She texted back that she couldn't wait for me any longer (apparently she had other things to do all day:) and that the stock opened at 7.49 and was already at 7.79 at 9:55 am. I decided (since it was definitely showing signs of a spike) to tell her to short the 150 shares at limit price 8.15. I figured one of two things would happen: 1. if it got that high there was an excellent chance it wouldn't hold, and 2. I was easing into a stock I would want to eventually short anyway. Enough of my jibber-jabber, here's the chart that shows my (Covestor-verified) trade:

And here's a 3 month chart to show where this stock has come from:

     How I picked my exit- after what felt like 2 seconds, my mom texted, "Got it:)". This confirmed it was a genuine morning spike! Now what? I called her on my lunch break and asked her what the chart looked like at open, and if there was any volatility before the 'rocket launch'. She said around $7.45 it stuttered. I figured, if it did in fact collapse, it would shimmy a bit at that support level- so I told her to put a limit order to cover in just above it, at 7.50. And there you have it. The best thing about the trade is that it finished up for the day, which means I'm placing this stock on both my 'Missions Completed' and 'Missions Briefing' lists.

Enjoying the weekend,

Evan

Missions Accomplished: ARNA, SKYT

Well, my Covestor account has me worried (It's starting to look like the Supernova pattern Timothy Sykes has me all too familiar with). I was able to cover two stocks today, ARNA and SKYT. The first was ARNA. Below shows the incredible tanking at market open (the light blue column indicates After Hours trading from last night through today's pre-market). I was torn on this trade. I really didn't want to cover (even though I was showing a profit), but two things got the better of me:

1. It was one of those 'fall off a cliff' openings I was afraid would bounce back at any time (I actually covered on the first big bounce @ 5.95).

2. I was home this morning to watch it- usually a bad thing because my emotions and psychological quirks take over (I'm sure none of you experience this;)



Next came SKYT. I wanted to cover this one today for one main reason: It wasn't up enough imo to short in the first place. I was showing a profit, so when it finally fell a little (low volume stock that moves like once an hour), I covered @ 3.20- you can actually see my 150 shares on any chart.

Still waiting on MAXY to really lose some ground, and PALM to forget it was hyped so much.

Steadily gaining ground on Master Sykes,

Evan

Three Charts, Three Fates

I hope you're having a great weekend! I've decided to post charts of three of the stocks I've shorted over the past two months. You'll notice the same key elements in each of them: Volume gradually fades after spiking, once the seal is broken (first down day after big run-up) the stock gets as volatile as a bull seeing red, and finally the hopelessness sets in as it heads toward normal trading levels. In succession, I give you MAXY, SKYT, and GERN:

I'd just like to thank Timothy Sykes for bringing every single one of these stocks to my attention. I know how to find these types of stocks myself at this point, but if he's already doing the digging for me... :)

My Four Horsemen

So while the world of finance came a-crumblin' down again today, being short MAXY, GERN, PALM, and SKYT (even though SKYT gained .01) paid quite well. Covestor is usually one day behind on updating their clients' portfolio values, but somehow my link (on the right) is two. I can't wait for it to show my most recent shellacking of the S&P. I would rather have the chart showing myself vs. Timothy Sykes (currently #1 on Covestor), but can't figure out how to configure the widget that way (any suggestions?).

I made two trades today, both profitable and loss preventing. I don't mind admitting that the talking heads over at Yahoo! Finance message boards are beginning to get into my head. Seriously, I don't know why I even read the ridiculous posts (9 out of 10 are bias with an agenda), but GERN is a stock focused on stem cell research, a science nobody really knows what to expect from yet. Given that Obama fully supports this type of research, I sold 100 of my 200 shares of GERN today at 7.48. I know, I know- I'm letting fundamentals interfere with my technical positions. I'm still learning the 'true' relationship between fundamentals and penny stocks.

Today was all MAXY needed to finally drift back below my initial buy (how many months ago?), so I covered 100 shares of my 300 at 8.17 near the close. I did this for three reasons:

1. Didn't want to be greedy (been there done that at the end of a down day only to see a gap up the next morning).
2. There was an earnings announcement after close. Don't think MAXY has a prayer (announcement hasn't come out yet 7:27pm 2/10/09), but why risk all 300 shares?
3. The stock downtrended aaaalllll day, and I followed Rule #6 of my strategy.

Unfortunately watching the market tread closer to year lows,

Evan

My Strategy

     It's about time I lay out all of my rules/criteria for choosing the stocks I short. There are always minor variations in the chart patterns (and I'll be the first to admit to bending these from time to time), but I like to stick to these 7 'unbreakables':

1. A stock that's had an incredible run (think 300%+ gains) over a short period of time (not longer than three months, and preferrably within three weeks).

2. I like the $2-$6 range, meaning the stock's around $2 at the beginning of it's run, and $6 near the top (or when I would consider shorting). I've found $1-$4 and $3-$8 can also work, but you get the idea.

3. It has to have had it's first down day. Period. Why short into something that hasn't shown the first sign of weakness?

4. Try to short stocks with a market cap <$500 million. You don't want extremely small market caps, though, or the broker you borrowed the shares from may force you to cover.

5. Large Volume spikes at onset of run have dissappeared (looks like a downhill slope).

6. Commit 100-300 shares initially to a short, and add only once more if it spikes (short squeezes) more than $2.

7. Fight every urge to cover!!!

     I haven't completely mastered the decision-making process when comes the covering for a profit. Currently, I'm using the same stair-stepping strategy used in shorting (Rule #6): Ease in and ease out. With the exception of Rules 6 and 7, this is pretty much the strategy I've learned following Timothy Sykes.

Warning: Do not try this at home!

Triple Play

I am now officially short MAXY, GERN, and PALM. All three met my strategy's criteria, and after having posted about each (except for GERN, which I had on my Stock Status's 'Mission Briefing' watchlist), I'm pleased with my initial entries. I had off this morning, and was ready with reserved shares for both PALM and GERN by market open (compliments of Think or Swim). I'll skip any rationale on MAXY, since those of you following this blog know I've been short about a month. As for PALM (which happened to be my first short of the day), all you pretty much have to do is look at this 1 year chart:

Sure, it may go higher in the near future (which is why I eased in with 100 shares), but I doubt the 'PRE' phone is enough to sustain this quick rise from the $1's. I know I said I could care less about the fundamentals, but this really isn't a true penny stock- it's the company that brought us the Palm pilot. Regardless, it's either consolidating or losing steam (volume leans toward the latter). Now that this account is on Covestor, you'll be able to watch the outcome. Since I don't plan on selling (aka 'covering') for a loss, this could be a wild ride!

Last but not least...GERN! This stem cell play gave me the perfect entrance on it's midday spike. I shorted at 7.96 and already have a decent profit on my 200 shares. If I listened to some of the posts (pumpers galore) on Yahoo! Finance message boards, I'd be freaking out! There's a reason most financial sites claim to be 'For entertainment purposes only':) Does this 1 year chart look familiar?

If you're a trader, and haven't opened a Covestor account yet- do it! It makes posting sooo much easier, knowing you don't have to take screenshots of your positions (like I did numerous times last month) for people to believe you. Thanks for annoying me enough, Tim:)

Happy transparent trading,

Evan

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

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