Trade recap for September 14th

I shorted 18,500 shares of GVBP at $0.39556 and I am holding those overnight. That is all. In the video I discuss ZOOM’s rise and AMIE, SSN, and TIV from my watchlist last night.

Today’s Profit: $0.00

Disclosure: Short 18,500 shares of GVBP. I have a disclosure policy.

0 thoughts on “Trade recap for September 14th”

    1. I don’t play breakdowns as shorts, even on news… see the academic studies of momentum — 52 week highs tend to have big upside momentum, lows not so much … in other words, downside momentum isn’t as sure a thing as upside momentum.

  1. I am curious: I know you do not normally do after hours, however, do you monitor it when you are in a short trade overnight? I am currently shorting ELN and have a afterhours buy to cover just in case it moves the way I want afterhours.

    Good luck on the GVBP – I am sitting on 5000 @ .41 hoping for one more gap up day before reality sits in…

  2. hmmm I wonder if they have done that study on biotechs with no products on market.

    I agree that 52 week lows are virtually meaningless but I would think productless biotechs might be different (at least they are in my past experience). As a negative test on a first product basically eliminates the company in most cases. But I haven’t done or found the research to prove it conclusively.

    Thanks for the thoughts.

    1. It is still a play on momentum … if no momentum effect it would just gap down and then not move.

      As to shorting productless biotechs, it is like put-selling–highly profitable but with occasional huge losses.

  3. Hey, Reaper, as an academic myself, I’d love to see the academic momentum studies you refer to.

    What you said totally matches up with my personal experience trading. When I try to short breakdowns (treating them like upside down breakouts), I’m not nearly as successful as buying breakouts. I find breakdowns tend to bounce too easily. In fact, just today I stopped looking for my day ranger watchlists to reach a LOD (other than my pre-planned Tim-style short setups), because I found trying to short those intra-day breakdowns was too much of a crap-shoot.

  4. Type your comment here

    Reaper :

    Yngvai — I was citing from memory from this: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=353749
    It’s been a couple years since I read that so my memory may be faulty.

    Thanks for the link to that paper.

    Here’s a sentence straight from it:

    “Further, we find similar results and,
    in particular, positive abnormal returns after the stock crosses either its previous high or low,
    suggesting returns continuations at the top of the trading range and reversals at the bottom of
    the trading range.”

    That does confirm that breakouts operate differently from breakdowns. My hunch is you have two separate forces at work here….momo/breakout traders on the breakouts, and dip buyers/”buy low”-types on the breakdowns.

    I’ve also observed this with gappers. Stocks that gap up huge don’t seem to make good shorts (and can sometimes still be good longs), but stocks that gap down huge (30-50% gap down) seem to make good longs (and usually horrible shorts).

    Here’s another good quote from the end of the paper:

    “Further, they suggest a rationale for technical analysis that uses past trading ranges
    in predicting market activity.”

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