Trade recap: Do your own due diligence

My call of PLUG as a potential long was horrible. Yesterday it did gain nicely but it spiked in the morning (reaching its high around 10am) and then faded all day. The fade has continued today, albeit more gradually. A stock that spikes quickly and then fades all day is not likely to continue its upward move.

plug

To correct what I said in the video, IMGG’s stock dilution from the PIPE they announced two days ago was only 40%, not 100%. Still, that is crazy dilution. With 370 million shares outstanding now the company has a market cap of $260 million.

Daily profit: $50.00

Weekly profit: ($380.64)

Disclosure: Short 5000 shares of IMGG. I have a disclosure policy.

37 thoughts on “Trade recap: Do your own due diligence”

  1. Hi,

    Could write something about HMDI?? y did it went 49,000%. Is it for real.

    Please provide your analysis on this stock

    Thanks
    Denny

  2. Hey, PLUG kicked my ass yesterday – well before it got ahold of you — drove me into the red by 610.00 — took all afternoon to bounce back to just a negative 90ish on several other plays. Today was fun however, thanks to Preston pick from here – everybody have a great weekend.

    BTW — if anybody has any advice on the following I would appriciate it:

    I am stuck in a short sale of MNKD – half my position at 6.17 the other at 6.28 (I know, I know…but Cramer said Sell Sell Sell….bleh…) — my thoughts is to let it run till close of trading day on tuesday then just take my lumps and move on if it is still showing strong upside. Any thoughts from the folks here?

    Thanks in advance…

    1. joe, what I say here is not as valuable as several others, reaper or btb but I will try to write what I think in hope that others will correct me if I’m wrong.
      When I saw you referencing a trade to Cramer (or anyone else for that matter) I was cringing to say the least. One thing you will have to learn is that no matter what any one person says, what matters is what the millions of traders think, which is what we don’t know. Trading based on what anyone thinks is trading on luck or hope, because that’s what it will boil down to in the end. All that matters is the price action, now that’s not my saying but Michaels and btb’s and others here that follow this type of trading strategy.
      I am surely no one to talk after taking a 18% loss on a trade today, but I can say for sure that basing something off of someone saying something will lose you money over time.
      For example; I lost money on a green/red play, but only because I’m not a master of the strategy yet, because I didn’t buy quick enough, and I surely didn’t sell quick enough. I botched up a proven strategy.

  3. A market cap of 260 million? Even if it was this high (it’s not.. it’s 180million) do you understand what affect that would have on the pps?
    If the FDA approves this for marketing, IMGG is a $5+ stock.

    P.s. I’m long from .11

    Bye

    1. No, I’m not wrong. I don’t make those kinds of mistakes.

      They just did a PIPE for 107,059,027 shares
      http://www.sec.gov/Archives/edgar/data/1205181/000106594909000185/i38koct09.txt

      “As of July 15, 2009, the number of shares outstanding of the registrant’s class
      of common stock was 263,361,552.” from the latest 10Q
      http://www.sec.gov/Archives/edgar/data/1205181/000106594909000138/i310qjune2009.txt

      Add them together and you get 370m shares, times $0.70, =$260m mkt cap

      You just got served … lol

      Just to confirm, from previous Q: “As of April 30, 2009, the number of shares outstanding of the registrant’s class
      of common stock was 259,036,552.” … so the PIPE did not commence before the last 10Q and thus you just got diluted 40%
      http://www.sec.gov/Archives/edgar/data/1205181/000106594909000094/i310qmarch09vfinal.txt

    2. Either way, you’re using fundamentals to examine a chart. . “Horrible deal, this one’s going lower”

      Yeah short term it may have a little downside.. but this is going to at the very least $1.50-2, according to *the chart*. When/if this is approved, you’ll be looking at the chart the relation to the current price to the price now and think to yourself, “you know, maybe I should’ve bought a little”

  4. Preston;

    Thanks for the comment and thoughts. Just a little back history, I did not buy (or in this case sell short) based on Cramer — I sold after the news came out. A couple of days of pain latter someone called into cramers show and asked about it, he did not like it. Didn’t really care about his opinion, however, was hoping that his effect might have helped it drop some. This is mostly a money managment question now…how long do you suffer before pulling the plug. Just looking for some general thoughts about it. No Boo Yaa here!

    🙂

    1. I think the lesson to draw is to only trade proven strategies and stick to the rules. Really, for every trade a trader should no before entering the trade exactly when he would take profits or cut his losses.

  5. No DJ, I’m using fundamental analysis to show the company is a piece of crap. The chart is another matter, and I can tell you that a stock up as much as IMGG is in a month is ripe for a fall. My main strategy is short selling stocks with similar charts to IMGG’s chart. So yeah, I know.

    dj :

    Either way, you’re using fundamentals to examine a chart. . “Horrible deal, this one’s going lower”

    Yeah short term it may have a little downside.. but this is going to at the very least $1.50-2, according to *the chart*. When/if this is approved, you’ll be looking at the chart the relation to the current price to the price now and think to yourself, “you know, maybe I should’ve bought a little”

    1. “I can tell you that a stock up as much as IMGG is in a month is ripe for a fall”

      Or.. is ripe for a continuation : )

      But it’s not like I have any risk holding the shares that I have, personally I wouldn’t touch it up here if not long already.. However, I think $5 is conservative if FDA approved

    2. Another note, if that’s a buy signal on an hourly, IMGG is gong *a lot* higher. If it hits .80s from here, I hope you cover

  6. Type your comment here

    Joe :

    Preston;
    Thanks for the comment and thoughts. Just a little back history, I did not buy (or in this case sell short) based on Cramer — I sold after the news came out. A couple of days of pain latter someone called into cramers show and asked about it, he did not like it. Didn’t really care about his opinion, however, was hoping that his effect might have helped it drop some. This is mostly a money managment question now…how long do you suffer before pulling the plug. Just looking for some general thoughts about it. No Boo Yaa here!

    Joe you ought to have a mental exit plan in place before you make the trade for winning and losing trades.

    In my experience time based exits (say waiting till tuesday) is the worst way to go about it.

    Either % move, dollar mark or chart mental stop is usually far better.

    FWIW I find Cramer’s calls to be basically like coinflips. He’s not accurate or inaccurate enough to be worth trading off of.

    1. Hmmm Tasty, actually, time-stops are probably the best tool in my arsenal. They are only useful for very particular trading systems, though, like say scalping TimAlerts. 😉

      DJ — Why the fixation with the share price? If you actually believe in the company, why not fixate on what they can sell or earn?

  7. DJ- Another note, I’m long IMGG from .01. I got the hot stock tip from your mother…she asked me to keep it down, said her son was in the basement but I didn’t believe her…now crawl back to the fuckin’ yahoo message boards.

    Reaper it’s your site but if you have too much patience for these true believer dipshits, I might have to take my witty banter elsewhere…and I know you would miss me. 😉

    Joe, the others here are 100% right, you gotta have an exit plan in place before you enter a trade, otherwise you end up in hope mode and get your ass handed to you more times than not.

    1. 1. Fuck you
      2. I’m no true believer
      3. Tim Sykes and his trusty homosexual sidekick, reaper, both shorted GVBP about 50% below the highs, meaning had they not covered, they’d have had a 100% loss, and now they’re repeating their mistake on IMGG

    2. sorry, reaper, for the homosexual remark. that was uncalled for. however, betheball is an idiot, and i should direct my attack to him.

      betheball:
      1) this chart still shows upside.
      2) pps will move on hype alone
      3) this isn’t a shell company
      4) public companies exist solely for the purpose of taking an idea, getting funding for it, and expanding said idea
      5) IMGG is an example of a public company needing funding to market a product
      6) if IMGG is FDA approved, according the chart, $5 is in order, if not $10
      7) one day you’ll realize that not everything is a pump and dump and once you get it through your head, you’ll regretfully think about to all of the lost opportunties that were lost because you’re unable to differentiate pump and dump price action from something with a real market containing real value

  8. Type your comment here

    Reaper :

    Hmmm Tasty, actually, time-stops are probably the best tool in my arsenal. They are only useful for very particular trading systems, though, like say scalping TimAlerts.
    DJ — Why the fixation with the share price? If you actually believe in the company, why not fixate on what they can sell or earn?

    Hunh, do you use them for multiday or intraday situations?

    at least for me and most of those I’ve asked multi day time stops like joe was proposing to use are next to worthless

    intradays I could see being valuable but they’ve never been more than secondary consideration for me.

    But I suppose it could be just Tasty’s lack of skill in using them 🙂

  9. PLUG, ENMD and SCIL are good shorts right now I believe. WHat I have found it that I ALWAYS get hurt when I try to chase morning risers. It just never ever works out for me. Happened just yesterday with my THLD buy. Is tim still holding on his IMGG ??

  10. http://www.interactivebrokers.com/en/accounts/fees/stocksPricing2.php?ib_entity=llc

    http://www.interactivebrokers.com/en/accounts/fees/commission.php?ic=1&p=stk

    Michael

    Noticed that your IB fees are quite high. If u haven’t used unbundled have you considered switching to it? From what I have researched if one does more than 300k shares per month then moving to unbundled can help reduce fees. Above 400k per month it begins to add up. Below is from IB’s web site. There are lot of other fees that need to be considered apart from what IB charges. But if u are paying about 2000$ in commissions per month then maybe u should have a look at unbundled.

    IB Unbundled Fees
    Volume (per month)(1): IB Commission per Share
    US Stocks, ETFs, and Warrants(2) Canadian Stocks(3)
    <=300,000 Shares USD 0.0035 CAD 0.008
    300,001-3,000,000 Shares USD 0.002 CAD 0.005
    3,000,001-20,000,000 Shares USD 0.0015 CAD 0.004

    1. thanks for bringing that up, Steven. It has been awhile since I’ve looked at unbundled. I tend to bid-whack, so unbundled would hurt me with ECN fees, though. I’ll see what my monthly volume is.

  11. DJ – a few things.

    1. No successful trader I know looks at a chart and and says “this looks like its going up to 5x its current price” or anything like that. So you saying that IMGG chart looks like it is going to $5 means less than nothing to me.

    2. The best indicators of a stock’s future value are what the management thinks the stock is worth and what sophisticated investors will pay for the stock. Considering that IMGG just sold stock (with 40% dilution to current shareholders) in a PIPE at 2.5 cents per share, I can conclude two things: the management is desperate for cash, and the sophisticated investors who bought those 100m shares do not think the stock is worth very much at all. Both of these inferences indicate to me that the company’s product is worth little even if it gets FDA approval.

    3. Take a look at CYOE’s stock. They had FDA approval and yet it didn’t help them, because people didn’t want to buy their crappy product. I wrote about CYOE on my GoodeValue.com blog almost two years ago.

    1. Reaper
      1. You’re right. Any successful trader doesn’t imagine price movement and hope it goes there. I do use price targets based on a system that has worked for me in the past
      2. Management for IMGG is probably garbage.. I’m not disagreeing with you there either. Future value — probably goes bankrupt long term. However, I’m anticipating a run into the FDA approval.. The CYOE chart shows the same anticipated run up. Most FDA approvals have been shorts, simply because of the chart pattern. Run ups to approvals get sold, Suprise approvals are bought and are run up. IMGG shows the anticipation movement. How can you identify a top in IMGG? Wait for the FDA announcement. I’ll be right there along with you shorting the hell out of it when it happens. but until then, be careful.
      I’m thinking short term downside will be .61ish (and that bottom might have already been put in. notice the huge volume spike on that dip, which typically marks a reversal in price action)

      Either way, good luck.

  12. Type your comment here

    Reaper :

    thanks for bringing that up, Steven. It has been awhile since I’ve looked at unbundled. I tend to bid-whack, so unbundled would hurt me with ECN fees, though. I’ll see what my monthly volume is.

    Yes bid-whack will affect you but you might still be better off with unbundled. It depends on your volume.

    Do have a look at your monthly volume. An alternative easy way to get this number is to get your online monthly statement from IB and look at the Trades section/get the monthly comm paid/ and multiply it (i.e monthly commis paid) by 200 (because comm is 0.005) . This should be close to but less than the actual volume as IB charges less than 0.005 for shares below 1$ price. So if u are trading penny stocks (less than 1$ for IB) the volume will be even bigger.

    Have you considered using a fixed price per trade broker (like Ameritrade) on some trades when your trade size is really big? However, with your trading strategy (as on many occasions you need to get in and out quickly) you need superb execution first. That is a must have in any broker you choose.

    I use IB for bulk buying stocks under .60 cents and small share lots of high price stocks. For other bulk buying (shares above 1$) I use a fixed price broker.

  13. Michael

    I did some calculations and these are the approximate worse case (i.e 100% remove liquidity) nmbrs for unbundled.

    .0035 (IB fees) + 0.003(typical ecn fees for remove liquidity) + other minor fees = 0.0065++

    >300k ==> 0.002 (IB fees) + 0.003(typical ecn fees for remove liquidity) + other minor fees = 0.005++

    So worse case unbundled is poor than the regular bundled 0.005 flat rate.

    So yes, bid/ask whack with unbundled will be worse than what u currently have.

    Conclusion: Have also a flat fee per trade broker.

  14. What broker did u use to trade Zagg on Friday? I tried buying using IB when it dropped to 5.6 and even raised my price above the current ask but IB didn’t get me any shares.

    On Thursday, too, my order to buy at 5.4 didn’t get filled. Even though it was trading below that price.

    Even my backup broker failed to get me shares.

  15. OK…thanks for all the feedback. On this one I broke my own rule of writing down my exit stratagy becuase I was *so* sure of it. Expensive lesson, but one better learned now than latter.

  16. Type your comment here

    Steven :

    Tim used ToS to trade Zagg

    https://www.thinkorswim.ca/tos/myAccounts/displayRates.tos

    $9.95 per trade (market or limit orders; 5,000 shares maximum)

    For orders over 5000 shares, any order types other than market or limit, or extended hours orders the commission for the entire order is our per share rate of $.015 per share ($5.00 minimum).

    So it seems that in extended hrs, ToS becomes 3 times as expensive as IB’s 0.005. Not good!.

    So maybe one strategy to reduce comm would be to use ToS to trade using the flat fee rate of 9.95 for a)highly liquid stocks b)during regular sessions. For other times IB can be the main broker and especially so for illiquid stocks.

  17. Steven — I wouldn’t trade IB for a cheaper broker. IB gives me much better, quicker executions than every flat fee broker I’ve tried, because they don’t offer direct access to ECNs. I do know SpeedTrader does offer flat fee trading and direct access.

    1. Yes, you are right. For that part of your trading strategy that involves scalping/shorting illiquid stocks that spike every now and then on pump and dump by the likes of Beacon, StockPreacher etc, having excellent execution is a must. Here you need direct access to ECN’s to buy and dump as quickly as possible. Flat fee brokers likely won’t be able to deliver as they will do some internal processing first.

  18. Reaper, hoping you can answer a question about Short Interest since you focus a on shorting. What would it mean to you when a stock suddenly has several million short interests that jump up in one month compared to previous months with a 28,000% change over previous month? What does this mean for investors?

    As I see it, it seems the stock is being manipulated but also see it as potentially going up as the short squeeze happens.

    Hoping you can provide some insight to a novice.

    Thanks

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