American Green Inc (ERBB)

[nopancakemix]

A Mouse Fart in a Tornado
Yeah it's a crude analogy but here a four application of it regarding ERBB;

1. Shorting penny stocks is not a crowded trade. Professional institutions do not trade penny stocks like ERBB. Maybe a few dark pools and boiler rooms, but big players like JPM or GS or ML still don't dabble in MJ penny plays. Additionally, most retail players don't have access to shorting penny stocks. Try it yourself with ETrade, Schwab, or ameritrade, most discount brokers don't allow it. In the one time I shorted MJN@ back in March 2013, ETrade wouldn't allow me to do so even with a substantial long position in MJN@ so I had to transfer the shares to my Merrill Lynch account to execute. It's not worth the hassle, nor is it worth the fees for a broker that accepts such a trade.

2. ERBB like all pennies do not have derivatives that can really make short plays worthwhile trades. Big Board and Nas stocks have options that can be traded short via long puts or short calls, giving a trader the ability to manage risk.

3. Especially at .03, ERBB is a moronic short. There is at maximum .029 to the downside. The volume of the short position would have to be substantial to make even a meager four figure return and if disaster struck, sending ERBB to .001 good luck finding any buyers to close that short position. The potential for upside at .03 after a high of .10 is substantial and a quick pop could murder a trader looking to cover.

4. Let's not kid ourselves, according to iHub short interest is at about 3m shares. Compared to the a/s count that is like a drop of water in the ocean. Short positions start putting downward pressure on a stock when they get up into the 15-25% range and beyond.

Believe me I would have opened a short position around .10. That was one of my targets I posted about my sale at .105. Another target I had was .20 (still do) but at .10, a 5000% gain on my original position, I would have entered a small short position just as a hedge. But at .03 only the most degenerate of gamblers would be shorting. That's not to say ERBB may not be going lower but bottom line, it's not the result of these bogeymen shorts people keep posting about.

And that's it for me folks, my 1 post a day at midnight (9pm on the left coast).