Top IHUB Posts

[Mariner*]

Posted by: Stock Lobster
http://www.investorshub.com/boards/read_msg.asp?message_id=16916068

A QUITE 'FYI' REGARDING POSTS ON THIS BOARD:

Okay, we have a couple of different types of plays which we talk about on this board, and I thought I might just identify them, and make a few observations about the best way to trade them. If you already know this, just move on. This is more for the benefit of some of the newer traders who have a few questions...

First and foremost, before buying anything we might talk about, always check the chart, and do a quick search on the boards for any red flags that might make you uncomfortable. These things are always a judgment call, and there are no 'sure things', no matter how attractive they may seem as we are looking.

NEWS PLAYS: When a stock issues news, generally, we expect to see a pop in the PPS. But, this is not a hard and fast rule. Not all news is created equal.

The news that really moves stocks is generally merger & acquisition news, or major contract and approval news, such as FDA approval for a device or drug.

Again, this also depends on the stock in question. Is the stock at a 52 week low, and there has not been news for a while? Then, like GLXI, HYRF or RXPC, it could have a 500% run when it begins issuing news again.

Has the stock already had a series of PRs in recent days or weeks, and the PPS and RSI are already peaking? You might chose to pass. In that case, all of the anticipation of news may already be factored into the price, and the market may "sell the news" instead.

Even if the news for a stock is fantastic, like ACTC's front page coverage of the New York Times last year, don't immediately translate that into holding the stock long term. See rule #1 on this board. Don't drink the kool-aid.

In the world of penny stocks, most companies are underfunded and need cash. A company that has just brought a new product to market will now need to pay for more products, or pay for past research. Nine times out of ten, that funding will take place through sale of shares. Whether it's USSE, ACTC, PMED or any other great product, the company's first interest is to take care of it's production line, not the value of it's share price. I'm not saying the company may ot have a great future, but you can generally sell your shares at a high price, and wait for a lower entry after the dilution is completed.

CHART PLAYS: These are generally 'bottom buster' plays. The feeling is that a stock which has 'bottomed out' or is in oversold territory, will turnaround. Therefore, we scan charts for stocks that look 'ready' to bounce.

This is an art as much as it is a science, and timing is never exact. Also realize that company dilution is often the cause for many penny stocks sinking into subpenny range. Check for dilution with accumulation/distribution and CMF indicators, amongst others.

I prefer "subbies", that is, stocks in the .001-.009 range. I find it is easier to find a low float, low OS reporting OTCBB in the .001 ready to run to pennies, than it is to find a triple zero stock that will ever manage to break out of the sub-basement. In general, we prefer OTCBB to pinks, because they are reporting to the SEC, and it's possible to scan their filings to look for exact share count, restricted shares, presence of toxic convertibles, and other crucial data.

MOMENTUM/DAYTRADES: Generally speaking, on this board, we aren't focusing on momentum trades, i.e. stocks that are moving rapidly, but could collapse again as quickly as they rose. However, many shell plays and news plays often turn into momentum trades, and so it's important to just review the guidelines.

Don't bet the farm on momentum plays! Their huge gains often inspire traders to put thousands of dollars at risk, but although you could win big, the downside is enormous.

The best technique for momentum plays is 'scalping'...trading between $500-$5000 buying small blocks that are easy to get into and, most importantly, OUT OF (remember, it's not always easy to sell a large block of shares in a momentum trade that's starting to cool off). Check the average size of the block going through on the level 2s. If everyone else is buying 5000 shares, and you just bought 40,000, that should be your clue that you're putting too much into this trade.

If a stock is moving rapidly, and you're not sure why, do a quick check on the board to see if any well known momentum traders or promoters are behind the stock.

If they are, that is not a deal breaker, but be aware that their exit could collapse the PPS suddenly. Find out how long they have been behind the play. Unless the run has just begun, you're generally better off waiting for the next one, unless you're an experienced scalper.

SPAM STOCKS/PROMO STOCKS Sometimes a stock is moving rapdily, and we're not sure why. Inevitably, a helpful poster wil tell us that it's being promoted by spam. Volume is enormous, and PPS is up as well. Again, this isn't a deal breaker, but don't drink the kool-aid. Find out how long the run has been on. The best entry is in the first hours of the first day of the run.

Realize that 99.5% of stocks that are being promoted have two looming problems. 1) shares that were given to the promoter are going to hit the market, heping slow down the run and 2) company dilution is certain to hit the market as well (the reason why the promoter was hired in the first place, is to help the company create "liquidity" to sell shares into) Lebed, Sharkster, Stockster, and many other well known promoters are constanty working penny stocks. Some people visit their sites regularly, just to know which are the latest campaigns, so they can avoid them...lol.

If you have any misgivings or uneasiness about this type of play, always do a google search for the ticker symbol in question, and the word "spam". There are many websites that track spam email, and often stocks are repeat offenders

LOTTO PICKS: On this board, we are defining lotto picks as longer term holds that have the potential of going up 10x. My one requirement for a lotto play is that the Transfer Agent not be gagged, and that you know the exact outstanding share count.

SWING TRADES: Swing trades are two three-day holds, such as ATLJ, EXCS or HYRF in recent weeks. These are safer if you don't have the time to trade during the day, or are unable to daytrade.

LONG TERM HOLDS: This is a short list in the penny world, but they do exist. HMGP, GLXI, TRGD and probably IMOT are examples. For a stock to be a long term hold, imho, it has to be fully transparent, with no debt, and valuable contracts or assets which are undervalued by the market...

To the best of our ability, we will identify the plays as such, when we can...

* please never invest more than you could afford to lose.
* Don't average down
* Double check the current PPS against the charts, and don't buy tops! Buy low, sell high is still the number one rule
* Always have an exit strategy at all times
* Know what your 'Uncle' point is for your plays. I personally never take more than a 50% loss on any stock

Good luck to all!