07/20 – GERN slow bleed

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


 

Pre-markt watchlist: TRXC, GERN, TEUM, AVEO, AXON and $SENS

Overall market

I notice the market is a bit slow this week. I had no trade on Thursday or Wednesday because there was just nothing setting up at all. TRXC was just doing its TRXC thing. With that I mean that this ticker likes to washout some longs and then rip and squeeze some shorts. TRXC has been doing this all month. Maybe longer, I don’t know. But since it’s been on my watch list its been doing that.

I was looking at GERN all week too. But this seems like a slow bleeder to me. I was expecting that 3.50 – 3.30 (today) to be some sort of break of key support type of play. But I never got the entry I really wanted on this all week. Today was a bit different, but I will explain later.

Overall I’d say that push strategies, where I short into a push / ramp into previous resistance, were no good this week. The market reclaimed and broke out of its down trend. So stocks reacted to this as well. Stocks are strong, so I have to be careful not to go too big on these overextended stocks. Even AVEO held its money after a dilution. I was expecting way more action from that ticker, but jumped from 1.85 back above two.

SPY, daily chart – break of trend

SPY 20182007

I am also looking into other strategies for going long on large caps. They seems to be in play with earnings season opening up. Netflix did a total crapper and brought the markets down. This opened up some opportunity. I am a penny stock person so this is new for me. Apple today is a nice play. I am long on it from that double bottom at 191.70 and curious if this will hold into my 192.50 target. I had to go in large though to make some dough. So far so good! The strategy is based on price action, rather then anything else. Double bottom and higher lows = buy. Double top and lower highs = sell. It is that simple really. Also keeping an eye out on the SPY. Large caps follow the overall market so as long as this holds trend, I will hold and sell at a specific target. In this case that 192.70 resistance from  Monday July 16, 2018. My actual plan on AAPL was to wait (or hope) for a washout to 191.00 and use this support. Then wait for a double bottom or higher lows. But that never happened.

GERN

I was looking at GERN all week. And to say that this is my favorite stock to play, would be a lie. I absolutely HATE the way this stock moves. When there is volatility, this ticker rarely has borrows. When it is at key support, it just does not move that much. GERN always has that slow move on it and then it suddenly pops or breaks. Hard to anticipate, because it can also reclaim just as easy. As it did today.

As I was looking at this all week, I decided to be patient with this today. Also, I knew there would be a washout if Low of Day were to break. And it did. This baby cracked. I entered into 3.35 with a decent short position and covered into that 3.20 sideways action, after 3.15 held and 3.13 wash was covered by that green candle. That hurt a bit because I had my cover ready at 3.10. Quickly changed that to 3.20 and got my fill.

GERN is completely high on a deal with Johnson & Johnson (“J&J”). IF FDA approves their product, then its a double win for GERN. If FDA does not approve its product, the company still manages to receive a milestone payment. The only real risk for this company is for J&J to pull out of this deal and have GERN fall on its knees.

This week was a slow week. I am going to enjoy my weekend with a drink and a nice dinner. We have a nice shop, butcher and greenery nearby. I might blow off some steam by steaming up a quality dinner and a perfect glass of wine.

WHATS MY CATCH

There are a few strategies out there. The big boys, or s they say, claim to short into small cap, low float, stocks that gap up. They either wait for a double top, lower highs, buyers exhaustion to short into. Other people like to short bad news or bad PR, like dilution/second offerings, bad earnings or general bad news.

I like to short into good news. Not when it was brought out, but when the momentum shifts and key resistance starts to fail. This means that smart money is taking their profits and start selling into follow up pops. These stocks are now over extended and have reversed from an up trend, to a down trend. Eventually prior support will be met and that is exactly where stop losses will be triggered. Which provide a perfect opportunity to short into.

In my opinion, it is a fable that it is better to short into resistance. Sell into strength and cover into weakness is what I have heard many times. However, my personal research has always shown me that key support is where money is made. This is because I only try to make something like 5% to 10% on a trade (when I am lucky!). Sometimes more. Also, I cut losses quickly. I do this, because I am a conservative trader (or, to be frank, a pussy). I do not like losing. I do not like to see red. Especially when short selling, when you are caught in a squeeze, your account can be scorched just as easy.  Losing money is easy with size too. So I only size into tickers that are down. For now anyway, until the market will shift again.

THE BIGGER PICTURE

I am surprised, looking at the SPY, S&P 500 and Dow Jones that the market has recovered its losses so quickly. I though the whole bitcoin hype would trigger a bear market and start a down trend when interest would fade. That did happen and we did see a small collapses. I was not expecting a trade war with China and Europe either. This was the initial blow that started a down trend. However, with booming markets and loads of good earnings coming out, the markets reclaimed and fought back to levels where we are now. This is nice, because I need more stocks to reach 52 week highs for me to short into over extended plays.


Who can help you?

My strategies are based on what I learned from Tim, Tim and Investors Underground. Short selling is easy, but you need to know what you are doing first.

Keep in mind that Tim Sykes and Investors Underground have excellent services that you can learn from. They have plenty of information to fuel your thirst for knowledge. If you are new, start with Tandem Trader by Nathan Michaud and Trading Tickers by Tim Grittani, both exceptional beginners dvd’s with plenty if information.

Short selling is hot business. Both Tandem Trader and Trading Tickers have plenty of information on short selling.

Kindly click the following link here for Tandem Trader:

Tandem Trader DVD

Please click the link below for Tim Grittani’s Trading Tickers DVD:

Trading Tickers

I hope you enjoyed this blog entry! As always, feel free to share this post!


If you are interested in Investors Underground and would like to learn more, please click the link here: Investors Underground or if you are interested in joining Tim Sykes Pennystocking silver, please click here: Pennystocking Silver.

  • kindly note here that this 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!

 

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