Shares of insurance software vendor Ebix (Nasdaq: EBIX ) were minding their own business on a humdrum day, until all hell broke loose and the stock fell more than 26% on truly massive trading volume in the early afternoon. So what: This stock suffered an entirely inexplicable fall a couple of weeks ago, but this time there's a real driver behind the action. A scathing three-part article that eviscerates Ebix for being overpriced and possibly fraudulent hit the news feed just as the panic-selling started, showing that investors were taking that message to heart.
People invested in Ebix are panicked. This is PRIME TIME to short. Normally I would watch to see if a stock like this settles in..but, after hours we got the news of an investigation being launched...this should only add gasoline to the fire.
I love the fact that the stock is WAY UP from its lows this year (400%) meaning a lot of people will decide to take their gains while they can adding to the selling.
Action: Short as many shares as you can get in the mid 22's and use 10% trailing stops in case some major short suddenly covers or they release good news to curb the bleeding. I think we could see another 10-20% tomorrow.
Friday, March 25, 2011
Tuesday, March 15, 2011
SHORT NOW- How the Japanese Crisis opens trading opportunities
Had a few people ask if I am short anything due to the horrible crisis in Japan. I am not, since no one company is shaping up to be the focus unlike BP with the oil spill disaster.
However, there are some great trades if you like taking short positions...Here they are from least to most risky:
The Japanese Yen (YCS)- Its been weak, and the only reason it hasnt crashed further is buying support from major Hedge Funds and the Japanese government.. Shorting it around $16 is still a safe bet.
Dennison Mines(DNN) at 2.55 , Uranium Resources 1.60 (URRE) and UraniumEnergy Corp (UEC) at 3.75 I think are pretty safe bets right now. DNN and URRE could see their 52 week lows.
Again use 20% trailing stops and STAY on top of it...if its dropping keep moving your stops to lock in gains.
Good luck.
However, there are some great trades if you like taking short positions...Here they are from least to most risky:
The Japanese Yen (YCS)- Its been weak, and the only reason it hasnt crashed further is buying support from major Hedge Funds and the Japanese government.. Shorting it around $16 is still a safe bet.
Dennison Mines(DNN) at 2.55 , Uranium Resources 1.60 (URRE) and UraniumEnergy Corp (UEC) at 3.75 I think are pretty safe bets right now. DNN and URRE could see their 52 week lows.
Again use 20% trailing stops and STAY on top of it...if its dropping keep moving your stops to lock in gains.
Good luck.
Tuesday, March 8, 2011
Tuesday Morning Watch-EVSI
LEI- Oil was down slamming all the running oil stocks. Could continue. Too risky now... Volume tapered off and I would look to short this before going long.
STVI- Sideline watching for now. I like this one for many reasons, but it needs some volume!! Could be a nice one to catch on an up move.
ROYL- This one is only up because of a pump that was fortunate to have oil spike right after it started....cooled today, Look for a short into panic if it starts dropping.
EVSI- Took a position again today. Rumors are of another round of promotion coming...this should catch the strong short action as of late in a squeeze. Could be a big runner over the next couple weeks.
Good Luck
STVI- Sideline watching for now. I like this one for many reasons, but it needs some volume!! Could be a nice one to catch on an up move.
ROYL- This one is only up because of a pump that was fortunate to have oil spike right after it started....cooled today, Look for a short into panic if it starts dropping.
EVSI- Took a position again today. Rumors are of another round of promotion coming...this should catch the strong short action as of late in a squeeze. Could be a big runner over the next couple weeks.
Good Luck
Sunday, March 6, 2011
What is Naked Short Selling
In a "naked" short sale, the seller does not borrow or arrange to borrow the securities in time to make delivery to the buyer within the standard three-day settlement period. As a result, the seller fails to deliver securities to the buyer when delivery is due (known as a "failure to deliver" or "fail").
Failures to deliver may result from either a short or a long sale. There may be legitimate reasons for a failure to deliver. For example, human or mechanical errors or processing delays can result from transferring securities in physical certificate rather than book-entry form, thus causing a failure to deliver on a long sale within the normal three-day settlement period. A fail may also result from naked short selling. For example, market makers who sell short thinly traded, illiquid stock in response to customer demand may encounter difficulty in obtaining securities when the time for delivery arrives.
Naked short selling is not necessarily a violation of the federal securities laws or the Commission's rules. Indeed, in certain circumstances, naked short selling contributes to market liquidity. For example, broker-dealers that make a market in a security generally stand ready to buy and sell the security on a regular and continuous basis at a publicly quoted price, even when there are no other buyers or sellers. Thus, market makers must sell a security to a buyer even when there are temporary shortages of that security available in the market. This may occur, for example, if there is a sudden surge in buying interest in that security, or if few investors are selling the security at that time. Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares. This is especially true for market makers in thinly traded, illiquid stocks such as securities quoted on the OTC Bulletin Board, 5 as there may be few shares available to purchase or borrow at a given time.
What is a Threshold Security? Threshold securities are equity securities that have an aggregate fail to deliver position for:
- Five consecutive settlement days at a registered clearing agency (e.g., National Securities Clearing Corporation (NSCC));
- Totaling 10,000 shares or more; and
- Equal to at least 0.5% of the issuer's total shares outstanding.
Threshold securities only include issuers registered or required to file reports with the Commission ("reporting companies"). Therefore, securities of issuers that are not registered or required to file reports with the Commission, which includes the majority of issuers on the Pink Sheets,18 cannot be threshold securities. This is because the SROs need to look to the total outstanding shares of the issuer in order to calculate whether or not the securities meet the definition of a "threshold security." For non-reporting companies, reliable information on total outstanding shares is difficult to determine.
Regulation SHO
Compliance with Regulation SHO began on January 3, 2005. Regulation SHO was adopted to update short sale regulation in light of numerous market developments since short sale regulation was first adopted in 1938. Some of the goals of Regulation SHO include:
Establishing uniform "locate" and "close-out" requirements in order to address problems associated with failures to deliver, including potentially abusive "naked" short selling.
Locate Requirement: Regulation SHO requires a broker-dealer to have reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due before effecting a short sale order in any equity security.6 This "locate" must be made and documented prior to effecting the short sale.
"Close-out" Requirement: Regulation SHO imposes additional delivery requirements on broker-dealers for securities in which there are a relatively substantial number of extended delivery failures at a registered clearing agency7 ("threshold securities"). For instance, with limited exception, Regulation SHO requires brokers and dealers that are participants of a registered clearing agency8 to take action to "close-out" failure-to-deliver positions ("open fails") in threshold securities that have persisted for 13 consecutive settlement days.9 Closing out requires the broker or dealer to purchase securities of like kind and quantity. Until the position is closed out, the broker or dealer and any broker or dealer for which it clears transactions (for example, an introducing broker)10 may not effect further short sales in that threshold security without borrowing or entering into a bona fide agreement to borrow the security (known as the "pre-borrowing" requirement).
Temporarily suspending Commission and SRO11 short sale price tests12 in a group of securities to evaluate the overall effectiveness and necessity of such restrictions. The Commission will study the impact of relaxing the price tests for a period of one year.13
Creating uniform order marking requirements for sales of all equity securities. This means that orders you place with your broker-dealer must be marked "long," "short," or "short exempt."
Locate Requirement: Regulation SHO requires a broker-dealer to have reasonable grounds to believe that the security can be borrowed so that it can be delivered on the date delivery is due before effecting a short sale order in any equity security.6 This "locate" must be made and documented prior to effecting the short sale.
"Close-out" Requirement: Regulation SHO imposes additional delivery requirements on broker-dealers for securities in which there are a relatively substantial number of extended delivery failures at a registered clearing agency7 ("threshold securities"). For instance, with limited exception, Regulation SHO requires brokers and dealers that are participants of a registered clearing agency8 to take action to "close-out" failure-to-deliver positions ("open fails") in threshold securities that have persisted for 13 consecutive settlement days.9 Closing out requires the broker or dealer to purchase securities of like kind and quantity. Until the position is closed out, the broker or dealer and any broker or dealer for which it clears transactions (for example, an introducing broker)10 may not effect further short sales in that threshold security without borrowing or entering into a bona fide agreement to borrow the security (known as the "pre-borrowing" requirement).
Temporarily suspending Commission and SRO11 short sale price tests12 in a group of securities to evaluate the overall effectiveness and necessity of such restrictions. The Commission will study the impact of relaxing the price tests for a period of one year.13
Creating uniform order marking requirements for sales of all equity securities. This means that orders you place with your broker-dealer must be marked "long," "short," or "short exempt."
Pink Sheets- Finding a Gold Nugget in the TRASH
Let me make something VERY clear....... Pink Sheet stocks are pure GARBAGE. At least 99.9% of the time...and Im being generous. Pink sheets are non reporting, delisted companies, that can basically do what they want until they get delisted.
Think of Pink Sheets as a prison....sure there is a guy or two that are innocent, a few thats probably gotten a bad deal and doesnt deserve to stay there, but its pretty safe to say most of the individuals in there should be in.
Originally pink sheet exchange was created in to help people trade out of delisted stocks. Before 2000 delisted stocks were printed out on Pink paper by the National Quotation exchange, I think they wanted to use RED but couldnt read printing on it. (Before this you were out of luck if your company you held stock in was delisted. ).
With the surge in online trading and discount brokers some smart gentlemen created the pink sheet quotation market in 2000. Since then they have added tiers to separate the outright scams (Grey Market) for halfway decent and even some solid companies. (There is a Grey market, but for all intents and purposes you should NEVER, EVER even consider these...EVER...did I say NEVER? and I am not against risk)
Pink Sheets do have their place. Because of regulations, its an easy place for big foreign companies to trade here in the US (in addition to the broader markets). There are some high profile companies that trade on it, and even NESTLE does...yes, THAT Nestle. Louis Vitton, and Mercedes (Diamler) has a portion trading on the pinks. Not to mention chinese companies no one has heard of like the worlds biggest bank (by market cap) at over a quarter Trillion ( IDCBY.PK) !! Any of these pinks I have no problem recommending to the moderate risk taker...just not my style.
Pinks are also great to Short-Sell under the right circumstances, and on VERY rare occasions you can find a decent start up here. As a general rule however most of the pinks that get press are hiring stock promoters to pump their stock and defraud the average investor. This is why you should not buy any pink sheet that you read about without putting it through the ringer. Not even ones mentioned here :-)
I like to look into pinks for two reasons. Good short sell opportunities and to look for one of the few major US companies that get delisted and sent here, that although they deserve it, they may not be here long...(meanwhile their share price tanks)! This presents some nice opportunities for us riskier types! Now I must be clear, just because it is/was a big company, doesnt mean its a buy on the pink sheets. ENRON ended up a pink sheet after going from $60 to under $2...but eventually after it was clear that they were completely bankrupt, it went to a sub penny! In fact if you invested $10,000 in ENRON when it was $1 hoping it would recover to $2 or $10 (pipe dream by the way, but MANY did) and didnt sell for 2 months, your $10,000 investment was then worth...drum roll....$20...and eventually $1. Not the type of return Im looking for.
But for Every 10 Enrons there is a solid company like GSI Group...this is what I look for.
GSI Group- This major Laser maker was de-listed gem from the high profile NASDAQ that once traded over $25 and bottoming out at under $1.50. As they got their act together, this stock could be purchased for under a $2.50 a year ago! Suddenly with rumors of a impending re-listing....the stock sprang back to life and by September 2010 it was back to $7. Although trying to catch these waves early is very difficult and should be your focus, it was at this point when things where looking up. It wasnt until December when I took note of this with the impending re listing.... at under $9 it was a solid LOW risk buy. Not easily said of pink sheets. Now back on the NASDAQ, I would still recommend it under $13, with a 20% Trailing Stop.
So after all this I am not going to recommend a pink sheet??? Nope, not yet. I think the education is important at this point however since I have my eyes on a few future Pink sheet trades!
Hope this helps, and stay tuned...
Think of Pink Sheets as a prison....sure there is a guy or two that are innocent, a few thats probably gotten a bad deal and doesnt deserve to stay there, but its pretty safe to say most of the individuals in there should be in.
Originally pink sheet exchange was created in to help people trade out of delisted stocks. Before 2000 delisted stocks were printed out on Pink paper by the National Quotation exchange, I think they wanted to use RED but couldnt read printing on it. (Before this you were out of luck if your company you held stock in was delisted. ).
With the surge in online trading and discount brokers some smart gentlemen created the pink sheet quotation market in 2000. Since then they have added tiers to separate the outright scams (Grey Market) for halfway decent and even some solid companies. (There is a Grey market, but for all intents and purposes you should NEVER, EVER even consider these...EVER...did I say NEVER? and I am not against risk)
Pink Sheets do have their place. Because of regulations, its an easy place for big foreign companies to trade here in the US (in addition to the broader markets). There are some high profile companies that trade on it, and even NESTLE does...yes, THAT Nestle. Louis Vitton, and Mercedes (Diamler) has a portion trading on the pinks. Not to mention chinese companies no one has heard of like the worlds biggest bank (by market cap) at over a quarter Trillion ( IDCBY.PK) !! Any of these pinks I have no problem recommending to the moderate risk taker...just not my style.
Pinks are also great to Short-Sell under the right circumstances, and on VERY rare occasions you can find a decent start up here. As a general rule however most of the pinks that get press are hiring stock promoters to pump their stock and defraud the average investor. This is why you should not buy any pink sheet that you read about without putting it through the ringer. Not even ones mentioned here :-)
I like to look into pinks for two reasons. Good short sell opportunities and to look for one of the few major US companies that get delisted and sent here, that although they deserve it, they may not be here long...(meanwhile their share price tanks)! This presents some nice opportunities for us riskier types! Now I must be clear, just because it is/was a big company, doesnt mean its a buy on the pink sheets. ENRON ended up a pink sheet after going from $60 to under $2...but eventually after it was clear that they were completely bankrupt, it went to a sub penny! In fact if you invested $10,000 in ENRON when it was $1 hoping it would recover to $2 or $10 (pipe dream by the way, but MANY did) and didnt sell for 2 months, your $10,000 investment was then worth...drum roll....$20...and eventually $1. Not the type of return Im looking for.
But for Every 10 Enrons there is a solid company like GSI Group...this is what I look for.
GSI Group- This major Laser maker was de-listed gem from the high profile NASDAQ that once traded over $25 and bottoming out at under $1.50. As they got their act together, this stock could be purchased for under a $2.50 a year ago! Suddenly with rumors of a impending re-listing....the stock sprang back to life and by September 2010 it was back to $7. Although trying to catch these waves early is very difficult and should be your focus, it was at this point when things where looking up. It wasnt until December when I took note of this with the impending re listing.... at under $9 it was a solid LOW risk buy. Not easily said of pink sheets. Now back on the NASDAQ, I would still recommend it under $13, with a 20% Trailing Stop.
So after all this I am not going to recommend a pink sheet??? Nope, not yet. I think the education is important at this point however since I have my eyes on a few future Pink sheet trades!
Hope this helps, and stay tuned...
Friday, March 4, 2011
Happy Weekend! Watching a few for Monday
After a great week of gains here is a few I will be considering Monday.... Hope you all killed it in LEI today...remember to stop loss those gains.
Now the Buy list....
EVSI- Think this one has consolidated again in the mid .70's...rumor is there might be some buying coming in next week...keep your eye out.
LEI- Im hoping to get in this one after some correction. I think if it consolidates on Monday morning we could see some legs. This one could go "ROYL" (Royal Energy) on us. Im looking for a down open with the profit takers to open the window to get back in.
SONS- Sonus networks- Keep an eye on this one ...in the news and always been a good runner...Like this if it dips.
STVI- Been watching this for a month or so since now its in the black(as of last filing) with its financial s and took a big bounce and didnt drop...needs more volume to create liquidity but a good one to watch.
Shorts list:
Royl- MONEY has been rolling and and lots of short sellers are getting hammered. This one is being MAJORLY pumped. Shorts are getting squeezed but they dont give up that easy. Dont try and time this one. Its okay to jump in a little late and take less risk. When this breaks, I think it will be fairly sharp...wait for a 15% drop before jumping in...
CXLT - Another pump that I am returning to.... Could be a great one to get in on!
There you have it, now Its time to take the weekend off...see you next week.
Now the Buy list....
EVSI- Think this one has consolidated again in the mid .70's...rumor is there might be some buying coming in next week...keep your eye out.
LEI- Im hoping to get in this one after some correction. I think if it consolidates on Monday morning we could see some legs. This one could go "ROYL" (Royal Energy) on us. Im looking for a down open with the profit takers to open the window to get back in.
SONS- Sonus networks- Keep an eye on this one ...in the news and always been a good runner...Like this if it dips.
STVI- Been watching this for a month or so since now its in the black(as of last filing) with its financial s and took a big bounce and didnt drop...needs more volume to create liquidity but a good one to watch.
Shorts list:
Royl- MONEY has been rolling and and lots of short sellers are getting hammered. This one is being MAJORLY pumped. Shorts are getting squeezed but they dont give up that easy. Dont try and time this one. Its okay to jump in a little late and take less risk. When this breaks, I think it will be fairly sharp...wait for a 15% drop before jumping in...
CXLT - Another pump that I am returning to.... Could be a great one to get in on!
There you have it, now Its time to take the weekend off...see you next week.
Thursday, March 3, 2011
NEW TRADE- LUCAS ENERGY LEI
Oil is burnin HOT right now...especially small cap oil, and the best time to buy is when you can ride the hype is... SO...
Just a heads up:
Im looking at taking a buy position on Lucas Energy.
LEI- $3.12
Out of all the small caps, this one looks best because it seems to have legit news:
The independent oil and gas company announced the completion of the Hilcorp Energy-operated Eagle Ford horizontal well. The well is expected to be put on production in a few weeks and Lucas expects it to meet or exceed expectations of 500 barrels of oil per day. That will increase its net production, cash flow and net produced reserves significantly, the company said.
Basically they buy old wells and use modern technology to side drill to get the oil out...apparently the old way they did wells, as much as 50% of the oil in the well! So these old wells are basically useless until this technology was employed....LEI gets cheap wells no one wants, wells that produced, side drills and makes money! Sorry, dont want to sound like a pumper, since I will be in and out on this one..
Also it a nice low float. A couple weeks if this news is solid, news that could increase their revenue dramatically, this could be a quick double up or more! If news is bad or non existent then the hype from now should at least net us a little gain...If I can pick it up under $3 trending north, I think im in.
Remember to always use a stop loss ...
Just a heads up:
Im looking at taking a buy position on Lucas Energy.
LEI- $3.12
Out of all the small caps, this one looks best because it seems to have legit news:
The independent oil and gas company announced the completion of the Hilcorp Energy-operated Eagle Ford horizontal well. The well is expected to be put on production in a few weeks and Lucas expects it to meet or exceed expectations of 500 barrels of oil per day. That will increase its net production, cash flow and net produced reserves significantly, the company said.
Basically they buy old wells and use modern technology to side drill to get the oil out...apparently the old way they did wells, as much as 50% of the oil in the well! So these old wells are basically useless until this technology was employed....LEI gets cheap wells no one wants, wells that produced, side drills and makes money! Sorry, dont want to sound like a pumper, since I will be in and out on this one..
Also it a nice low float. A couple weeks if this news is solid, news that could increase their revenue dramatically, this could be a quick double up or more! If news is bad or non existent then the hype from now should at least net us a little gain...If I can pick it up under $3 trending north, I think im in.
Remember to always use a stop loss ...
Working on a portfollio Tracker through Covestor
Some of you may know of Covestor.com. It is a great way to see verified trades. I have actually had an account with them since early 2008 on one of my old Etrade accounts. Right now I am trying to re establish a account with my current Etrade account so its more accurate.
If I can get this done, then you will all be able to see I am not "blowing smoke" because it allows me to show you my complete positions in those accounts.
If I get that set up, then naturally I will link my other accounts if it lets me. Etrade is very ineffective when it comes to shorting pennys since they rarely have the shares. (Etrade borrows shares from the same place as Ameritrade, Scottrade and others). Because of this I use other DB's.
Hopefully I can have this up to verify all my trades soon enough...for now, youll just need to take my word!
If I can get this done, then you will all be able to see I am not "blowing smoke" because it allows me to show you my complete positions in those accounts.
If I get that set up, then naturally I will link my other accounts if it lets me. Etrade is very ineffective when it comes to shorting pennys since they rarely have the shares. (Etrade borrows shares from the same place as Ameritrade, Scottrade and others). Because of this I use other DB's.
Hopefully I can have this up to verify all my trades soon enough...for now, youll just need to take my word!
Short Selling Watch List
EVSI cracked the other day, and luckily I had taken the rest of my profits over .80! Average ROI for that was over 80%! Not bad, Not Bad at all.
There are a few GREAT short selling stocks right now that we need to look at....
Now for my Short selling list:
ROYL- $7.80 (Royal Energy)
This stock is on a massive run in only in the last WEEK, its up over 300%. Looking at the company and financials, this will be a blood bath when it cracks as well. Ive found lots of pumping of this dog, and the offices are a rent a office space pretty close to me. Yesterday it traded 50% over its FLOAT alone. Lots of traders in there trying to beat each other down . Still might have some legs, but once it cracks...say 15% loss or more interday, then it should be a very solid short!
BDCO- 8.20 (Blue Dolphin Energy Company)-
Oil prices are running up these energy micro caps and BDCO is no exception. If for your Valentine you bought this at $2.40, you would be sitting fat at over $8....but every pump must end sometime and this one will be VERY soon in my opinion.... Wait patiently for the crack and you might be able to turn a nice profit as people panic to lock in their huge gains...
Im working on some others, but trading is about to begin...
More to come...
There are a few GREAT short selling stocks right now that we need to look at....
Now for my Short selling list:
ROYL- $7.80 (Royal Energy)
This stock is on a massive run in only in the last WEEK, its up over 300%. Looking at the company and financials, this will be a blood bath when it cracks as well. Ive found lots of pumping of this dog, and the offices are a rent a office space pretty close to me. Yesterday it traded 50% over its FLOAT alone. Lots of traders in there trying to beat each other down . Still might have some legs, but once it cracks...say 15% loss or more interday, then it should be a very solid short!
BDCO- 8.20 (Blue Dolphin Energy Company)-
Oil prices are running up these energy micro caps and BDCO is no exception. If for your Valentine you bought this at $2.40, you would be sitting fat at over $8....but every pump must end sometime and this one will be VERY soon in my opinion.... Wait patiently for the crack and you might be able to turn a nice profit as people panic to lock in their huge gains...
Im working on some others, but trading is about to begin...
More to come...
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