How To Short Sell Penny Stocks?
Adapted from a post by Timothy Sykes on Tue 21st of July, with a timely update. – Ilene
That’s what I do for a living, check out a recent guest blog post at INO.com.
"We ALL get the emails, “UOMO is going up big, buy today” , “If you’re looking for 3000% gains go long XYZ”…the dreded penny stock pump and dump! The pump and dump often plagues new traders looking for huge returns and veterans trying to play them along with the “pumper”. But it’s often very risky and millions are lost everytime the “pump” is on. But there’s one person I personally know (I was able to have a nice sushi lunch in NY with him) who trades the “pump and dump’s” and makes a KILLING doing it! You’ve all heard about him and his name is Tim Sykes. Love him or hate him, he’s one of, if not the best person out there for penny stock info and trading." Brad of INO, MarketClub.
====================================================================
Timothy: People often ask me what I do for a living and I love to see the look on their face when I say, “I short sell and write about hyped up and manipulated Penny Stocks”
When I first started blogging in 2007, Investopedia said it was not possible to short sell Penny Stocks. They have since changed their minds now that my big mouth has been shouting at the top of my lungs, you can short stocks under $5, it’s not as risky as you might assume, but only if you know what you’re doing.
The key to my survival and success in a decade-long career in this greatly misunderstood niche has been to be wary of everyone and every company. Most people buy Penny Stocks thinking that they have a shot at turning a few hundred or thousand dollars into millions. Certain financial websites that title articles “The Next Million Dollar Penny Stock” look to take advantage of that.
I take it one step further, looking to take advantage of those gullible suckers as they fail to realize the odds of a $1 stock becoming a $100 stock, let alone a $5 or $10 stock, are horrific. Mainly due to the fact that ALL stocks trading under $5 are flawed in some way (that’s why their stock price is so low). Whether they’ve done a toxic financing, had bad earnings, one of their products flopped, insiders have ransacked the company’s cash, the company has unaudited financials—there’s a million things that are wrong with them—but I don’t just short sell any random penny stock.
I only want to short the most actively traded Penny Stocks, the ones that have recently spiked and attracted thousands of traders due to current world events, stock promotion, newsletter and media mentions. I like shorting Penny Stocks, really only stocks trading between $1 and $5 per share that have spiked 200, 300, and sometimes 500% in a few days based on what I believe to be temporary catalysts.
I spend hours each night digging through SEC filings, ignoring their hype filled press releases, creating daily watchlists for TIMalert subscribers, trying to find the ugly truth behind the penny stock world’s biggest winners.
Some recent dirt:
Sucker-filled Hemispherx Biopharma (AMEX: HEB) has surged 50 cents to $4 in the last 2 months on rumored FDA approval for their drug, all while doing two financing’s at an average 40% discount to market prices…and now they’re trying for their third! Check out my recent post from June 9th. ( I shorted at $4.18, covered at $3, but even now at $2ish, it’s still a potential short)
SpongeTech Delivery Systems (NASDAQ: SPNG.OB) has combined advertising at sporting events with paying stock promoters several hundred thousand dollars & millions shares of shares of stock to send out email blasts and write articles about how great the company’s products are, sending this infomercial sponge-seller’s stock surging from 1 cent/share to 28 cents/share in the past 2 months (I shorted at 18 cents, covered at 11), now at 15 cents/share, it’s still a potential short.
These are just a few recent examples, there are always new pump & dumps, to throw out that very technical term, and by doing what nobody else does, namely investigative research (above and beyond just agreeing with the company’s rosy press releases).
[Addendum] Today’s dirt:
Today, one I see is CHINA, which ran up from 1 to 3 based on hype for its upcoming IPO CDCS, but CDCS has bombed so here at 2.80, CHINA is a potential short down to the $2 range.
Tim Sykes
My site TimothySykes.com is a great tool for any trader out there, but if you’re really interested in making some great trades, then check out my DVD’s, and if you’re ready to take it to the next level become a member of TimAlerts today.
