05/29/2018 the TTOO trap

I started my day trading career with Tim Sykes and when I wanted to learn more, I joined Investors Underground. The DVD’s that helped me the most were Tim Grittani’s Trading Tickers and Nate Michaud’s Tandem Trader.  Software that has helped me in my early years was: Trade Ideas software. Now I use FINVIZ ELITE. Click on the highlighted links for more details. For my main page, please click here: Day trading for beginners

As a short biased trader, you are always on the lookout for the worst of the worst companies and there are many tickers with bad reputations like DRYS, TOPS, HTBX, BIOC and ZN to name a few.

TTOO, also known as T2 Biosystems Inc, is a Biotech company specialized in “in vitro” diagnostics. I have traded this ticker a few times, long and short. What I like about the this ticker, is the price action. This ticker always has range and follows trend. When it breakout, it breaks out. When it breaks down, it breaks down. TTOO rarely offers big surprises in price action.

What I want to say in this blog, is that you need to know the history of the tickers. Some tickers you know are garbage. But you also need to have a feel of a ticker, to know how to enter and exit. This is experienced and cannot be learned from a book or a YouTube video. To clarify I like to mention a ticker that ran last November on hype. XNET, when blockchain / Bitcoin was popular, had a completely different feel in price action compared to DPW. These were up on the same hype, but had completey different spreads (different gap between the bid and ask). As I recall, DPW had a wide spread and had price action, where the stock price jumped or dropped 10 or 20 cents instantly. This is dangerous, because DPW was only a 1 to 4 dollar stock. This made it hard for me to enter or exit a position, because you are risking to lose 105 to 20% in mere minutes. XNET, as example, was a smoother play. This ticker also had a wide spread (5 to 15 cents), but also had a price of $16ish at the time. So taking this spread risk into account there was much less risk, because you were only risking 0,94% risk on spread alone.

Anyway, back to TTOO. This ticker has always been a smooth play. Especially when there is volume. Lets have a look at the daily chart.

TTOO offerings

Yesterday, May 29, 2018, the FDA approved / cleared TTOO’s bacterial panel. This tells me nothing, as I am not a bio-engineer. What I do know and understand is price action. When TTOO went parabolic, Market Makers sold into the spikes like mad! I was wondering, yesterday, why this major sell-off took place. Then I looked at the chart and realized that something was coming. I also do occasional swings and these type of charts rarely offer opportunity.

When you see a drop like that on the daily chart, always check what the news was and why a ticker dropped. TTOO did the same thing as last time. Management hyped the stock up with PR. Some massive PR near 52 week high levels. Let it run a little more and then file for offering. Please memorize this chart. Memorize that drop. Learn to check for any offerings and look at the news feed if there was any major news prior to an offering. These types of companies need money. A lot of money! So they will definitely make use of this type of manipulation of hopeful (degenerate) traders. When people lose money, over the backs of tickers, I get sad. But mostly sad because people do not do proper research into the history of a company. I’ve been a bag holder for similar mistakes (BIOC, HTBX). Please do not make the same mistakes like I did. Do not be fooled by greed! Take your profits and run for the hills. Because these companies do not care about you, about there investors. They truly care about one thing. One thing only.. MONEY!

The only advice I can give you, is to make a list of companies that have screwed traders before. Also, some you should know already like DRYS, TOPS, BIOC, HTBX and add TTOO to that list too.

For the record, I still see some opportunity long. This ticker has proven to reclaim that dilution and there is that 50 EMA test coming up at 7.10. If TTOO can hold this number, base and go up. TTOO will have a great chance of breaking out again. Don’t forget that HEAR also did an offering recently and was not killed by the offering!

I hope this post offers some insight or sheds some light into a different way of looking at at stock. Feel free to share this post! Also, do you have a list of bad companies? Tell us how you try to avoid offerings, dilutions or dreadful revers splits.

I started my trading career with Tim Sykes and when my breakout strategy did not work for me anymore and when I was lost, I joined Investors Underground. The DVD’s that helped me the most were Tim Grittani’s Trading Tickers and Nate Michaud’s Tandem Trader.  Software that has helped many trader can be found here: Trade Ideas software.

  • kindly note that this blog post should not be treated as advice, trade advice or any of the sort. Always trade your own plan, cut losses quickly and never follow any alerts. Always do your own research and trade accordingly!
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