IMDS rallied Nov 24, 2009. Looks ripe for another correction.

IMDS made a second big jump in row; the stock seems to fit what Tim Sykes calls Stair Stepper pattern in his educational video -- although he rarely if ever trades stocks this cheap. It's common for such stocks to pull back after such events. It's interesting that in the 5-min chart, the rally is seen to be basically dominated by the first 15 minutes of trading. In the long range chart, the historical highs for IMDS are still way up, while the slow but steady growth in volume looks promising.

MCLN, Nov 24, 2009

MCLN made another step so I am adding this event to my database of extreme penny-stock events, with day and intra-day charts for future reference and visual learning. Note the intra-day correction which bottomed around 50% of day's gain. The intra-day pattern resembles EOPI and PLMO on their rally days.

Tim Sykes' AENY trade, Nov 19, 2009

I continue building a database of Tim's trades on the basis of trade log on his site for research and education purposes. What interests me is not so much when exactly the trade was entered intra-day but rather, the longer time scale context in which it was placed. Since selecting trade ideas is the key to success in penny stocks, the goal here is to reconstruct the selection criteria, not the details of trade execution. The trade was closed Nov 19, with buy level at $2.80, sell level at $3.02. According to public data on Tim's site, this is a long trade entered on Nov 18th -- and that's essential to know. It's interesting again at what price level this break-out was bought, and note that even though the next day opened with a gap upward, the stock was sold -- which in this case proved prudent. So again, ignoring technicals when closing the trade once it's profitable is the thing I take home from this trade -- it could be a chance or it could be a time-tested wisdom.

Tim Sykes' NLST trade, Nov 18, 2009

According to the log on Tim's site, the buy level was $4.16, sell level $4.40. It is interesting that the stock was going up on the day the trade was reported, but Tim's blog makes one feel he approaches the stock with a short bias. Most likely this is a short trade initiated the day before, Nov 17. If so, the trade was closed early the next day's morning which in this case proved prudent. This is an example illustrating how long to wait before entering a short trade -- waiting for the market to prove one's assessment.

Tim Sykes' IMGG trade, Nov 18, 2009

On TimothySykes.com, this is entered as a winning trade with sell level at $1.64, buy level at $1.42. There is little doubt that this is a short trade, initiated most likely early in the Nov 17th session. The company filed 10-Q on Nov 13, which triggered a rally. The following day it must have looked like the stock ran out of steam. It is interesting that when closing the trade, a powerful technical indicator (an opening with a downward gap) was ignored -- similarly to the way it was done for AWSL. Does ignoring technicals in the short trades begin to look like a feature of Tim's style? Something to be aware of when analyzing future trades.

Tim Sykes' VRMLQ trade, Nov 13, 2009

On Thursday morning, Nov 12, VRMLQ announced a patent news, triggering a rally. It's very interesting that, according to the buy and sell figures reported on his site, Tim entered the rally after or near the technical break-out at $21.50 (sold next day at $22.97). Therefore this looks like a technical long trade in a news-driven context -- unlike his recent EOPI trades which were purely fundamental shorts while technical context was ignored. The balance of technical and fundamental vis-à-vis long and short in this market is a food for thought.

Tim Sykes EONC trade, Nov 11, 2009

I continue collecting a gallery of Tim Sykes' recent trades so that with time it may become a useful educational tool. As I gather from the blog entries on Tim's site, the stock was shorted on fundamentals (misleading earnings report). The strong conviction explains another short trade in EONC (the first one is found here).

MDFI makes another step, Nov 16, 2009

The news of Medefile's 10-Q became public at 4:27 pm, according to Yahoo. Apparently we are dealing with a news anticipation event. The news itself (which the market did not know) does not seem encouraging as according to the report, the company was losing money faster in Q3 than it did in Q2. However it's hard to tell what the context of trader's expectations for the company is. The numbers do not communicate a sense of an improving business model.

Technically, the 5-min charts shows a lot of volume in the first 10 minutes which apparently triggered the rally. I would not be surprised too see further sales in the stock amid general lack of interest in the coming days.

Tim Sykes' EONC trade, Nov 10, 2009

This post is another addition to the gallery of Tim Sykes' trades -- I am trying to reconstruct the logics of his decision-making. Most likely this is a short trade (but strictly speaking, in a complex case like this one can't be 100% sure). If this is a short, then a change in the intra-day trend on Nov 9 and an opening with a gap (down) must have served as a trigger. (Another hint to pay attention to inter-day dynamics). Either way, a difficult trade to execute.

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SNVP mania continues, Nov 10, 2009

I must admit I was wrong downplaying the importance of yesterday's gap in SNVP on the basis of intra-day dynamics. (A caveat -- these posts are written from a purely technical standpoint; it's irrelevant whether SNVP is a pump-and-dump, whether this is an oil and gas or cosmetics company, etc.) The stock continued to move higher with the same pattern: a ton of buying in the first 5 minutes of trading, seen in the 5 min chart where the excessive volume within the first 5 min bin is highlighted in red. This looks as if whoever is buying the stock is absent during the business hours and responds to some news received in between the trading sessions. What could explain such a buying pattern? Perhaps the stock is being promoted to some unsophisticated investors is Asia who out of necessity (the time zone difference) find it difficult to participate in real time? If that is the case, the stock may have a long way to go.

If I were to draw a conclusion on the basis of the very limited amount of observations in penny stocks (all of them documented here) I would conclude that one needs to put more weight on the inter-day dynamics (such as gaps between the days) and downplay what happens intra-day.

It seems too risky to short such a stock now, before there is evidence that the mania abates. Even if it abates, a study I recently came across mentions that stocks touted via e-mail spam often fail to return to previous levels due to liquidity being too low to move the price either way once the stimulated interest wanes.

SNVP, Nov 9, 2009

A strange-looking event: 1) the last piece of meaningful news on SNVP was issued on Nov 2nd. 2) on Nov 9th, the stock opened with a huge gap and a spike in the volume (see charts) -- this looks as if tons of buy orders were submitted before the opening bell (not something a professional would do) 3) downward dynamics prevailed already in the first 30 min of trading. Kind of makes one think of stock manipulation.

Tim Sykes' QXM short trade, Nov 6, 2009

This is an inter-day short trade. According to Tim's notes on his site, the date of the trade is Nov 6 but judging by the price level (bought at $4.31, sold at $4.80), the stock must have been sold short a day before. That day, Nov 5, was indeed the day stock cracked but Tim's stated sell price indicated that he was part of the action from the very beginning. With no easily found news related to the stock during the time period, this looks like a masterful trade. It is interesting that he has executed a long trade in the same stock just the day before.

Tim Sykes' COT trade, Nov 4, 2009

On Nov 4, Cott filed a Material Definitive Agreement form with SEC, following a press-release about the offer of new notes on Nov 3. On Nov 4 one could be wondering whether the news is already priced into the market. Although the volume showed increases, there was nothing dramatic. Apparently Tim has resolved the doubts in favor of the stock, buying at $8.66 and selling at $8.88.

Tim Sykes' QXM trade, Nov 4, 2009

I continue recording and researching trades published by Tim Sykes on his site for fun and self-education. QXM was bought on Nov 4 at $4.61 after two consequitive days of openings with gaps, sold on the same day at $4.89. This is one of those numerous cases when the stocks start to "get noticed" for no apparent reason -- I was not able to identify surfacing of "news" related to the company last week when the stock began moving. Checking e-mail spam could be a good idea but I am just beginning my research in how to implement this technically.

Tim Sykes' DDRX trade, Oct 30, 2009

For the story behind Diedrich Coffee, read Motley Fool. The big picture of this once penny-stock is illustrated by the week chart. Tim decided to short DDRX on Oct 30 apparently following the news and the technical indications of a crack in the stock the previous days. According to the data on his site, his sell (short-sell) price was $25.70 and the buy (cover) price was $26.53.

EOPI mystery rally, Nov 5, 2009

I continue screening for high volume movers in the OTC universe. EOPI's recent pattern on the day scale very much resembles UNCO from two weeks ago. We now know that UNCO continued its downward slide since making a similar jump. Unlike EOPI, UNCO's jump was triggered by news. Unlike UNCO (and like IVOT) here we see a sustained rally throughout the day. Having no clue as to what's going on, it's hard to form rational expectations in this case. The only rationality can be the one of studying market's irrationality. So I am filing this curious case here -- I am not ruling out that the interest in the stock may continue. Again, I would test whether one can proceed with taking next day's opening with a positive gap as an intra-day entry trigger the way it could have worked with IVOT.

IVOT follow-up

Yesterday IVOT did open with a small gap (0.0041 vs previous close at 0.0040), so my self-imposed condition for maintaining interest in the stock was fulfilled. The stock made a new high in the first 30 minutes of trading then sold off. So the intra-day realistic 20% profit opportunity was there. From the volume however it looks like selling was not heavy; it seems that the majority of people who bought into the momentum on Nov 4th still hold the stock. Speaking of myself, I was about to buy in the first 5 min of trading -- only to realize, after checking my order, that the commission my broker would charge me would be outrageous (since the stock is very cheap, one needs to buy hundreds of thousands of shares or more and the brokers differ in how their fee structure works in such case, in particular with the OTC BB stocks).

So what did I learn? First, my screening the day before with very light analysis did deliver an actionable signal. Second, one needs to think about choosing a broker with the right commission structure for such plays.

IVOT jumps on big news, sustains the rally through the day, Nov 4, 2009

IVOT jumped on the news of a distribution agreement with Whirlpool (WHR) for its green product. The magnitude of the event against the backdrop of the last months' lack of action in the stock can be easily gauged from the longer range charts above. What makes the stock different from the likes of UNCO and PLMO (abortive Supernovae) is, besides the sheer size of volume on the day of the jump, its ability to sustain the rally throughout the day. Indeed, the 5 min chart looks different from the pattern of big jump -- big pull-back -- mid-way consolidation, often seen in such cases, in that buying seems to be distributed throughout the day more evenly. It's hard to extrapolate conclusions from the higher frequency time scales to longer range, but if the stock opens with an upward gap today, things may become interesting. Definitely worth watching.

Tim Sykes' CTDC trade, Oct 29, 2009

This looks like a messy but eventually profitable trade. Again, on his site, Tim only gives the date when the trade was closed, which is in this case Oct 29, and the buy and sell levels ($4.00 and $4.42). One can only guess when the trade was enetered. We know for sure the trade was closed on Oct 29.

Tim Sykes' AWSL trade, Oct 26, 2009

On Tim's site, the date of this trade is Oct 26 (Monday), buy price is $3.24, sell price is $4.10. As is seen from the chart, Oct 26 could be the day when the trade was closed but the trade itself must have been entered one or two business days before. On Thursday it must have been clear that the stock gave a crack. One could question the reason for closing the trade the very first thing Monday morning despite the fact that the stock opened with a downward gap, but on the other hand, desire to take profit is understandable in such a situation.

Tim Sykes' RODM trade, Oct 23, 2009

Here is a trade I found myself scratching a head to explain: a value trade on a penny stock? RODM had an earnings report on Oct 22 which apparently was a disappointment. The next day, the stock opened with the gap and Tim bought it, but apparently the stop loss was so tight that the position was closed with a loss (bought at $5.27, sold at $5.23, according to TimothySykes.com. While a small profit could theoretically be made intra-day on that day, the stop-loss proved beneficial in the long run as the stock kept moving lower. What do we learn? Apparently, an opening with a gap in penny stocks is big enough an indicator to someone with Tim's experience, so it's worth risking a small stake.

Tim Sykes' AMLM trade, Oct 22, 2009

Here is a big move and a successfully executed trade: the trade is listed on Tim's site as an Oct 22 with a "buy" at $2.69 and a "sell" at $2.97 -- most likely he bought the stock the day before and exited the trade on Oct 22. But again, I don't have the intraday data for the stock. A good timing in any case.

Tim Sykes USEG trade, Oct 22, 2009

As you see in the immediate history of the stock, what it did a couple of times was making a big step upwards, then taking a breather for three or four days, then making another big step. This is what Tim calls stair-stepper in his educational materials. According to the info on the same site, Tim bought at $6.12 and sold at $6.09 -- a small loss. Typically, such stock develop flag formations and it's hard to predict the next big step. It seems you can only be sure once you are inside the big step, which is something you can in principle detect intra-day by a combination of large price and volume jumps.

Tim Sykes' CBOU trade, Oct 20, 2009

I continue my studies of Tim Sykes' penny stock trades, based on the freely available info found on Tim's site. This CBOU trade was made on October 20 with the "buy" level at $8.93 and "sell" level at $9.06. The stock was down on the day but the trade is listed as profitable. The movement is tiny on the big scale of things in the chart, I assume this was a long trade and an attempt to buy a break-out, based on the previous day's data. The stock had no news that day. Unfortunately no intra-day data but I figure it takes some skill to close such a trade with a profit.