You might want to pack a lunch for this one…it’s gonna be long.
I can’t believe how quickly the time has passed since my last post. I’ve traded several penny stocks in between then and now, so I’ll try to use some discretion as to how detailed I’ll get with describing those trades. I don’t want to make this thing so long that it ends up making people want to jump off a cliff.
Well, the last time I posted on this blog, I was holding a position in GV, which subsequently crapped out on me. The breakout simply didn’t have any follow-through, and instead tanked. I ended up getting stopped out at 2.241 with a $48.89 loss.
Profits in HTM
On to a more positive experience…I bought 250 shares of U.S. Geothermal (HTM) back on 3/13 after finding out about it on 3/11 from Rich Jr.’s Twitter feed. It had been in a very solid head-and-shoulders bottom pattern since August of 2013, and looked to have some serious potential on a break of the 0.62 neckline. Here’s the chart below:
Well, the price did crack above the 0.62 neckline on 3/13, which fired off my Trade Trigger and got me in at 0.6299. It had a nice spike on the first day of the breakout, and then stalled for a couple of days, but then punched through 0.80 on 3/18. I was VERY tempted to get out when prices hit 0.89 near the close, but I thought that it may have one more day of upward action, so I stayed in overnight. I figured that if it could strongly push (or even possibly gap up) through 0.90, I would stay in until it hit 1.00. On the next day (3/19), prices indeed spiked over 0.90 for a brief moment, but then they quickly began to reverse. I thought it wise to go ahead and lock in the gains that I had obtained, so I exited 0.85 for a $35.07 profit.
Deep down I thought the stock could run to 1.00, which it eventually did about a week later, but when you’re working with a small account, you have to play things VERY tight. If I would’ve had more cash in my account, I may have held through the chop and seen 1.00 on it, but I’ve seen these types of scenarios turn ugly too many times to not be conservative on this play. All in all, I’m totally pleased with the HTM trade.
Crappy Loss in BAA
Now, on to a jacked-up trade. Since late December 2013, Banro Corp (BAA) had been consolidating into a nice triangle formation (higher lows & lower highs), and looked poised for a breakout over the 0.70 level. Check out the chart below:
The breakout did indeed come on 3/13, when prices hit a high on 0.7299. Well, I thought it would be a good idea to get in the next day, seeing as how 0.70 resistance had been breached. I placed my order first thing in the morning & got a crappy fill for some undetermined reason. I got filled at 0.75, which just so happened to be a penny shy of the absolute dead high in this stock. Prices haven’t done anything but retreat since then, and as of this writing the stock is at 0.51. I got stopped out at 0.6101 (far too large of a distance from entry) for a $47.97 loss. A big mistake I made with this one was not setting my stop more tightly. For this kind of stock, with a relatively low average daily volume, I should have set the stop much closer to the breakout point. Lesson learned. What a sucky trade.
And the Dumbest Trade of the Year Award Goes to…TNGN
This one has to be one of the biggest brainfarts of my trading career thus far. I got all hyped and geeked about Tengion Inc. (TNGN) due to the chatter on Twitter regarding regenerative medicine and the attention being drawn to other companies like HART. The idea was that TNGN would move as somewhat of a sympathy play with HART. The chart indeed looked solid, with quiet volume and steady accumulation, but I didn’t wait for any kind of breakout. I just bought because it seemed like it was going to “do something”.
To be honest, I didn’t have my OWN reasons for getting into the stock; I was just hyped up at how cheap it was, and looking too much at what other traders were saying about it on Twitter and so forth. I bought 450 shares of it at 0.26 on 3/18, and basically held them as prices declined until they hit 0.226 on 3/24. Without any kind of catalyst, and without any official breakout, I was just “holding and hoping”, but not having any REAL reason to be in the trade. That’ll be the first and last time I do that. I took a loss of $35.29 on that one.
The chart on TNGN still looks good; it seems to have found a floor at 0.18, but I probably won’t touch it again. I’m not fond of OTC stocks overall due to the fact that I can’t set Trade Triggers with them to get the heck out if I need to. But anyway, for craps and ha-ha’s, here’s the chart for TNGN:
On to more happy trades…
The Market Throws Me a BONE
This has been the most profitable trade of my (reborn) career thus far. I had been scoping out Bacterin International Holdings, Inc. (BONE) since March 4th, and the note that I had put on my watch list at the time was “If she cracks 0.82 she’ll run.” The chart had a BEAUTIFUL head-and-shoulders bottom pattern that had started back in May of 2013. Check out the chart here:
Well, the main resistance point (or neckline) was roughly 0.80, and the highest price reached over the past 5 months prior to March was 0.82, so I chose that as my resistance point to watch. On 3/19, prices popped well over 0.82, hitting a high early in the day of 0.97, but then cooled off in the afternoon to the mid-0.80’s (now I sound like a weatherman). I didn’t even catch the fact that BONE had popped until I saw Rich Jr.’s tweet about how the block buys happening in BONE were pushing the price to new highs, and when I pulled up the chart, I knew it was time to get in. I got in near 3:00 in the afternoon on 3/19, buying 200 shares at 0.855. I felt real comfortable about my position, seeing as how I still bought over the main breakout point of 0.82, but didn’t buy at anything over the 0.90’s. Perhaps the most important data point was the fact that BONE closed on 3/19 at 0.84, two cents higher than the 5-month-strong resistance point of 0.82.
Anyway, the next morning a major news item dropped right before the open, and BONE went ballistic. Prices shot up to a high of 1.41 within the first 20 minutes of trading. At this type of velocity, high prices are inevitably going to be unsustainable, so I thought it best to take the money and run. I exited at 1.30 with a profit of $69.01. No complaints about this one!
Some people might say “Why didn’t you hold? If BONE hit that high of a price in just one day, there’s no telling where it may go in the future!” Well, in my experience, there IS some telling where it will go. Prices that move too high too fast are hardly ever sustainable. I exited on 3/20 at 1.30, and prices are currently at 0.71 as I write this (4/9/14). According to the chart, prices have not revisited anything over 1.00 since March 20th. They NEVER closed above 1.00, even on the day of the huge spike. Simply put, that crap don’t last. You have to recognize when the party is over. The nature of penny stock trading is that these price spikes are VERY temporary. I’m not looking for a long-term scenario here, because I know I’m hardly ever going to find one. To be honest, the perception that buying & holding is somehow more “noble” than a quick in-and-out scalp is foolishness. The bottom line should always be what’s gonna MAKE YOU MONEY. And in an unsustainable scenario like BONE, it’s better to take the money and run, doggone it.
PAL Was Not My Pal
This was another dud, courtesy of my own impatience and possibly greed. I found out about North American Palladium (PAL) through Twitter as well, and at the time it looked somewhat viable, although looking back on it the chart formation was rather flimsy. On March 24th, prices cracked above 0.56, a decently-held resistance level (since the end of January 2014), and volume picked up pretty strong. Here’s the chart for PAL:
It was in the middle of the market session when I decided to get in–hardly ever a good move; normally I make all my buying decisions before market open or after market close. So, I bought 250 stupid shares of PAL and rushed into the trade, and although the chart had a decent look, I can’t honestly say that it was the best setup. I got in on 3/24 at 0.5749 and basically had a cheap thrill ride that lasted until two days later, when I was subsequently stopped out at 0.4915. Total loss: $40.85. PAL has done nothing but crap out since that time…as of this writing, prices are at 0.345.
The Three Stocks I’m in at the Moment
Man, this post is taking even longer than I thought it would, and I trust me, I thought it would be long. I’m in Tengasco (TGC), Dejour Energy (DEJ), and Samson Oil and Gas (SSN). Each of these stocks are in the oil/gas sector, and they all have banging charts. Here’s the chart for TGC:
In my mind, TGC is a coiled spring right now. Buying under 0.50 has all but dried up, and today was the first day of significant buys at or slightly above 0.50 in quite a few trading sessions. Sellers haven’t seemed to be willing to budge off prices any lower than around 0.46-0.47 for this one. My stop is set at 0.4545 (last solid support point). Today’s perk over 0.50 has been quite significant. I actually got in on 3/24 when prices popped over 0.54 resistance (held since July of last year), and got filled at 0.5599, so I have a ways to go just to break even at this point, but I see this one running to at least 0.70 when the pop does happen. There’s a lot of buildup on this stock right now, and it’s highly doubtful that it will result in a price breakdown at this point.
Dejour Energy (DEJ)
I got into this one when it broke a very long-term resistance point of 0.25 (held since late 2012), see 3-year chart below:
I got long 400 shares of DEJ at 0.2692 on 3/21/14. The initial boost was followed by a somewhat ugly chop period, and just today it’s been showing some signs of life. I wasn’t actually sure whether or not prices would come back or hit my stop at 0.215 (point of most recent breakout), but thankfully the consolidation didn’t crap out. There was some chatter today about Warren Buffet being bullish on Canadian energy stocks as a possible backstory. I have no idea what made prices perk up today; I’m just glad they did. Volume was insane, close to 8 million shares traded, so I have a sneaking suspicion that we may see a crack of that “Holy Grail” resistance point at 0.30 tomorrow–or very soon.
Samson Oil & Gas (SSN)
SSN has been a “thorn in the flesh” for many traders that I’ve interacted with on Twitter. In my mind, you can’t ask for a better looking chart. Check it out here:
Prices have been steadily uptrending since SSN found a floor at 0.40 in mid-December last year. I see nothing but accumulation from that time, with occasional “blips” above the 0.50 level. The important thing is that the lows are getting higher, a good sign of increased demand for the stock at higher prices. This type of consolidation, on quiet volume for the most part, hardly ever signals lower prices to come. I see SSN being quite explosive once it cracks 0.60, but it may give a few more “false alarms” (like it did on 4/1 & 4/2) until then. My gut tells me that SSN has potential to run to at least 0.80 once the 0.60 wall falls down. I have a Trade Trigger stop set at 0.42 in case things crap out, but I don’t think that’s likely any time soon.
So there…God-o-mighty this was a long post.