Disclosure: No positions in any stocks mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.
Category: Very Important Posts
HOD list: How to find stocks breaking out to new highs
Are you curious how I find stocks making new highs so quickly. Watch the video as I show and explain the “HOD list” or “high of the day” list.
Disclosure: No positions in any stocks mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.
Trade recap: Market insanity edition
I missed all the good trades on the market panic but I live to fight another day.
Daily profit: $835.60
A new strategy of mine: playing bounces after huge panics. +$4 on two trades so far. Recent bounce plays I’ve attempted:
POSC – bought at low of .102, sold at .1075 (oops)
PDGO – Bought well at 1.44, sold half at 1.525, sold rest at 1.349. Lesson: risk is much higher the less a stock has dropped. My identification of where it would bounce using level 2 was correct, however.
Trades:
+ BOT 2,500 AMEL false Stock 1.579 USD ARCAEDGE 08:51:15 12.50
+ SLD 5,000 LEI false Stock 2.600 USD SMART 09:43:14 25.00
SLD 5,000 LEI false Stock 2.6100 USD SMART 09:43:20 25.00
BOT 5,000 LEI false Stock 2.5200 USD ISLAND 09:44:57 25.00
+ BOT 5,000 LEI false Stock 2.496 USD ISLAND 09:45:54 25.00
BOT 5,000 LEI false Stock 2.3300 USD SMART 12:51:15 25.00
+ SLD 5,000 LEI false Stock 2.360 USD ISLAND 12:51:38 25.00
10:14:05 PDGO B 1.44 1000 ETMM
10:14:05 PDGO B 1.44 1000 ETMM
10:15:35 PDGO S 1.525 1000 NITE
10:17:09 PDGO S 1.34 100 NITE
10:17:14 PDGO S 1.35 900 NITE
Disclosure: No positions in any stocks mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.
March & April pump & dump recap
No comments, just beautiful charts. Please let me know if I’m missing any big ones. I included all the biggest pumps and most of the smaller to medium pumps.
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SPNG – Wasn’t promoted since last summer, but it finally saw its executives arrested.
Disclosure: No positions in any stocks mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.
SEC sues alleged masterminds of Emergent Health (EMGE) pump & dump
See my previous post calling Emergent Health “the next pump.” Tim Sykes also wrote about Emergent Health.
Evidently the SEC agreed with Sykes and myself as they have sued individuals involved in an alleged scheme to pump and dump Emergent Health and another company, Cardiovascular Sciences. Following is the SEC’s litigtation release; see legal complaint (pdf) for more details.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21513 / May 4, 2010
Securities and Exchange Commission v. Seven Palm Investments, LLC, et al., Civil Action No. 1:10-cv-02755 (N.D. Ill.) (May 4, 2010)
The Securities and Exchange Commission filed a civil action today in the United States District Court for the Northern District of Illinois against Naperville, Illinois based Seven Palm Investments, LLC and its principal Peter P. Veugeler, together with Orlando, Florida based Cardiovascular Sciences, Inc., and Lawrence H. Hooper, Jr. of Oviedo, Florida, for antifraud and registration violations.According to the SEC’s complaint, from at least October 2007 through September 2009, Veugeler reaped a total of more than $8 million from the pump and dumps of two unrelated companies, Cardiovascular Sciences and Emergent Health Corp. The SEC alleges that Veugeler, through his company Seven Palm, promised financing to both companies in exchange for nearly all their purportedly unrestricted shares. Veugeler, among other things, entered manipulative trades in both companies’ stock, allowing Seven Palm to sell its stock holdings in both companies at artificially inflated prices.
The SEC’s complaint further alleges that Cardiovascular Sciences and Hooper, Cardiovascular Sciences’s president and CEO, disseminated false and misleading press releases and other correspondence to investors between October 2007 and February 2008. The complaint also alleges that Veugeler reviewed and discussed with Hooper a number of the false press releases and directed him to work with a third-party stock promoter to issue the press releases to the public.
According to the SEC’s complaint, Veugeler engaged in manipulative practices aimed at misleading the market to increase and maintain artificially high prices so Veugeler could resell Seven Palm’s Cardiovascular and Emergent holdings for substantial gains.
The SEC’s complaint further alleges that Veugeler devised a Cardiovascular promotional campaign to facilitate Seven Palm’s liquidation of its Cardiovascular shares and that many of the Defendants’ public misrepresentations and omissions concerned Seven Palm providing funding to Cardiovascular. The complaint alleges that public statements regarding Seven Palm providing funding to Cardiovascular were misleading because at the time they were made, Seven Palm had not provided any funding to Cardiovascular.
As alleged in the SEC’s complaint, the defendants violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a judgment against all defendants providing for injunctions, and civil money penalties. The complaint also seeks disgorgement of ill-gotten gains with prejudgment interest against Seven Palm, Veugeler, and Cardiovascular Sciences, and penny stock bars against Veugeler and Hooper.
Here is the stock chart of Emergent Health:
Here is the stock of Cardiovascular Sciences:
Disclosure: No positions in any stocks mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.
Reaper Radio: Live call-in show at 8pm Eastern tomorrow
Listen to me tomorrow (Sunday) night at 8pm Eastern time. I will have an hour-long show that must not be missed. Simply put, I will attempt to give in audio form the longest-awaited and greatest blog post I have never finished writing, “The greatest investing blog post in the world, part 2: Evidence-based investing & statistical thinking.” (Check out Part 1 of the blog post series.) I will discuss how I died and how I killed a man. I will give you the only advice on how to win at Dragon Poker.
Those who may miss the show can subscribe to my iTunes podcast feed.
After my speech I will take any and all viewer questions, related or unrelated.
Please leave a comment below if you are interested in hearing this as a recurring show and let me know what you think of the time slot.
Disclosure: No positions in any stocks mentioned because none are mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.
How to learn to trade penny stocks
This is my motivational / instructional video on how to learn to trade.
The keys to success:
1. Don’t be lazy. Trading is hard work.
2. Look it up. Use Google and Investopedia and other resources. Read trading books at your local library. I have suggested a few good ones.
3. Don’t believe it unless there is proof. Lots of people lie about trading success. Look for proof that a strategy works before using it.
4. Don’t waste my time (or the time of any other decent trader) with stupid questions … I’m quite willing to help if you have a novel or worthwhile question but I will ignore you if you show that you have not put forth any effort.
5. Anyone who is serious about learning to trade penny stocks should read every single blog post I have written, as well as every post by Timothy Sykes, Tim Bohen, James Krieger, and probably every post by Pradeep Bond. To do less is laziness. A couple other traders who have blogs that might be worthwhile are BigT and JohnC.
6. If you value your time more than your money, I recommend buying Tim Sykes DVDs (Pennystocking Part Deux & TimFundamentals Part Deux are the best and I own both).
I should note that @investorslive did not say he made $50k on VSTNQ … I was exaggerating. His Twitter feed is annoyingly promotional, though, as he mainly uses it to promote his subscription stock chat. So while he will have great calls like “$VSTNQ is on watch today” before the market opened and it quintupled, there is plenty of “chat is on fiiiiiiiiiiiiiiiiiiiiiiiiiiireeeeeeeeeeeeeeeeeeeeee” type tweets. I subscribe to his pay stock chat room, InvestorsUnderground. If you sign up using my affiliate link you can save up to 15%.
Disclosure: No positions in any stock mentioned. Thinkorswim is one of my brokers. I am an affiliate of Tim Sykes and Investorsunderground. For more details on those relationships, see the terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.
Q&A: How to deal with the wash sale rule & trader tax status
Many traders do not understand wash sale rules; failing to do so can lead to huge tax problems. Below is the definition of wash sales and how to account for them according to the IRS.
Wash Sales
You cannot deduct losses from sales or trades of stock or securities in a wash sale.
A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:
- Buy substantially identical stock or securities,
- Acquire substantially identical stock or securities in a fully taxable trade,
- Acquire a contract or option to buy substantially identical stock or securities, or
- Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA.
If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale.
If your loss was disallowed because of the wash sale rules, add the disallowed loss to the cost of the new stock or securities (except in (4) above). The result is your basis in the new stock or securities. This adjustment postpones the loss deduction until the disposition of the new stock or securities. Your holding period for the new stock or securities begins on the same day as the holding period of the stock or securities sold.
In the video I describe how I use a program, Tradelog, to account for wash sales. Another option is to become a mark-to-market (MTM) trader. To be a MTM trader you must fit the criteria to have trader tax status (as opposed to investor tax status).
Disclosure: No positions in any stock mentioned or shown. I am a client of Robert Green’s CPA firm. I am not a tax professional. This blog has a terms of use and you can find all my disclaimers and disclosures there as well; my full terms of use is incorporated by reference into this post.
Trade recap: Short selling NXTH for fun and $2700 in profit
Horrible trading on my part with NXTH but I still did okay. I love penny stock trading! See the video for more. Also check out a special edition of Tim Sykes’ Livestock tonight from 6pm to 7pm EST.
Daily profit: $2677.44
Intra-day chart:
Disclosure: No positions in any stock mentioned. This blog has a terms of use and you can find all my disclaimers and disclosures there as well; my full terms of use is incorporated by reference into this post.
My Review of Tim Sykes’ Learn Level 2 DVD
After pre-ordering it two months ago and receiving it two weeks ago, I finally finished watching Tim Sykes’ Learn Level 2 DVD and here is my review.
Conclusion: This is a pretty decent trading DVD but there is not nearly enough video of Level 2 in action. As someone who has plenty of experience trading and trading using Tim Sykes’ strategies, I did not want another DVD of Sykes explaining how he trades. I wanted a DVD of him showing how he uses level 2. So most of the approximately 5 hours of video was needless repetition for me. For someone looking to learn Sykes’ strategy I would recommend Pennystocking Part Deux or TimFundamentals Part Deux (I own both). I could only recommend this to someone who has no experience with level 2 and little understanding of technical analysis who may have purchased TimFundamentals or TimFundamentals Part Deux (the two of Sykes’ DVDs that delve least into technical analysis).
Pros
- Sykes explains important facets of technical analysis and level 2. He shows lots of level 2 data of interesting OTC BB stocks.
- Presentation style is good and he is easy to understand. He describes the basics of Level 2 so even someone without any experience or knowledge of it can understand him and learn.
Cons
- There is very little in the DVD that a follower of Sykes with a year of experience watching level 2 would not already know.
- Video quality is only adequate. The first 40 minutes or so of disc 1 were shot with Tim in front of a green screen and there is some flicker in the green screen. After that disc 1 is screencast and the quality is good. The sound quality is the opposite: the first 40 minutes are very good and after that it is only okay. See the descriptions of the discs below for details on which parts of which discs are screencast and which are done in front of a green screen.
- After watching a bunch of Tim’s DVDs, I just want him to be a bit more professional. It is okay to look unkempt and have random crazy analogies and to sing the Cotton “Fabric of our Lives” song, but please don’t have a 20-second conversation with your girlfriend in the middle of the video!
- I would have preferred a lot less in the way of stock charts and more actual live level 2, especially of Nasdaq (not OTC BB) stocks around key inflection points. Most of the stocks Tim showed on level 2 were boring. I know it is tough to find stocks that are most interesting, but I would have preferred waiting another month for the DVD if that had meant I would have gotten to see more interesting and useful level 2.
- The stocks that Tim shows on level 2 are either OTC stocks (for which level 2 is quite different than listed stocks) or boring stocks that were not moving much. I would have much preferred to see some interesting Nasdaq stocks.
Disc 1: Intro to Tim Sykes and then definitions and level 2 basics.
Disc 2: Looking at a few different stocks on live level 2 but also a lot of intra-day and multi-day charts. This was mostly done in front of a green screen.
Disc 3: Some random stuff about trading stocks, some level 2, Tim trading IFNY (an OTC BB stock) and showing its level 2. Half of this disc came from one of Tim’s weekly Livestock shows. Unfortunately Tim spends some time answering random viewer questions (not related to Level 2) during that segment. 75% of this DVD is green greened, 25% is screencast with Sykes in a little video box.
Disc 4: The first part of this disc does not have level 2 info, just stock charts, with Tim talking about fairly basic technical analysis and technical trading strategies he uses. I like this part, but he should have waited until the right time to record level 2 video to support his various patterns like the “cliff dive.” I do like that this disc is screen captured.
A Gratuitous Level 2 Screencast (recorded by me with little commentary)
Disclosure: No positions in any stock mentioned. I am an affiliate of Tim Sykes and earn a commission if anyone purchases his products through my links. I purchased the Level 2 DVD from Tim Sykes and I own many of Sykes’ DVDs and have certain business relationships with him. See my terms of use for full details about my business relationships with Timothy Sykes. This blog has a terms of use and you can find all my disclaimers and disclosures there as well; my full terms of use is incorporated by reference into this post.