Report Card #16

Dear L.,

I most likely wrapped up today´s trade and wanted to tell you about them. I traded twice and the result was two wins – pretty nice.

So… let´s just right get into it.

GEVO (Gevo Inc., Basic Materials) was one of the three stocks I was watching. We have encountered this stock already previously. Basically, this is a dilution machine, having traded at more than $60k split adjusted years ago. Last week, it experienced an incredible rise, followed by an equally strong crash. After Friday´s bounce I thought that GEVO was about to continue selling off today.

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Coming into the trading day my plan was to see how GEVO reacted at previous support around $8.8. Right out of the gate GEVO climbed towards this anticipated level. When it could not break $8.85 I shorted at 8.73, chasing a little bit. GEVO did pull back after the failure to break through resistance. It fell through VWAP and I covered half my position at $8.35. Instead of further selling off, GEVO bounced and tested the $8.8 level again. Even though it failed, VWAP supported this time and therefore I took my other half off at 8.55. This was early as it turns out. GEVO traded as low as $8.15 in the following minutes.

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Later in the day however, GEVO started to squeeze doing this.

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All in all, I am quite satisfied with this trade. Relating to my previous comments about the need to improve my Risk/Reward, I am especially happy about this entry close to resistance. The loss given my stop was relatively small compared to my target price (which I did not achieve though).

The second stock that I traded was CADC (China Advanced Construction Materials Group, Inc., Industrial Goods). CADC had been pumped on Friday and was pumped again today. After having pressed the “locate” button on my trading platform about 500 times, I finally was able to locate shares during CADC´s pump.

CADC hit the circuit breaker halt before topping out below $10. When CADC felt very weak, I shorted at $8.75, expecting VWAP to fail. And VWAP did fail. CADC washed to $7.8. I tried to cover half my shares at $7.8-$7.9 yet CADC was very illiquid and I failed in doing so. CADC even crawled back over VWAP. At this point in time, liquidity basically disappeared and even another pump seemed not impossible. When CADC fell again below VWAP without selling off considerably, I covered 2/5 of my position at $8.05 to protect myself. Finally, the bids for CADC where pulled and the stock washed to $7.6. I covered the rest of my shares at $7.7, which was way too early as it turns out.

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I am quite satisfied with this trade too. The only thing to criticize in my opinion is my full cover at $7.7. I should have left on at least 1/3 here.

Given these trades I think that I deserve a C+ for today´s discipline and execution.

Best,

Nils

Report Card #14 & #15

Dear L.,

after no trades on Thursday, I put on three trades today and surprisingly the result was three wins.

Let´s have a look at today´s opportunities.

Because of an analyst upgrade this morning SLNO (Soleno Therapeutics, Inc., Healthcare Sector) gapped up. In general, analyst upgrades are no news worthy of a 20%+ gap. This and the fact that SLNO has very weak fundamentals, made me quite bearish. When the market opened, SLNO tried to spike but failed in doing so. I entered my short at $3.27 when SLNO seemed to fail VWAP. I was a little on the early side but a few minutes later SLNO did fail and washed down to $3 where I covered at $3.02. SLNO bounced and I put my short back on again at $3.23 to cover at $3.04. When SLNO bounced for the third time, I was ready to reshort again. The stock did not reach my anticipated entry level though. After failing crucial support at $3, SLNO went to lows of $2.8. This once more demonstrates that I am not patient enough with my exits. After my second short, I should have left some shares on instead of covering all. In fact, I did expect support to fail. Trading in this way however my risk/reward still is not acceptable.

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In the afternoon, chat rooms went crazy and pumped a list of stocks such as CHNR, CADC, CCCR, YECO and CREG (China Recycling Energy Corporation, Industrial Goods Sector). Because I was not able to locate shares for the most extended stocks, I shorted CREG.

CREG reached a high of $2.06 before trading off. When a very bearish candle appeared on the chart, I expected CREG to wash below VWAP and shorted at $1.9. I was too early though. CREG made a final attempt to break the high of the day. When it failed however, it went below VWAP and was not able to reclaim this anymore. I covered at $1.8. As we may see on the chart, CREG reached a low of $1.7. Once more, my failure to exit properly and a bad risk/reward are demonstrated. I should have taken off half into the wash and set a stop on break even above VWAP for the other half.

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While I am happy about the three wins today, I have as well realized that I truly need to improve my exits. Without patience, I obtained a D+ today.

Best,

Nils

Report Card #13

Dear L.,

today I learned about A+ trade setups. When these setups present themselves, one should size in (which I did not do) and take full advantage of these gifts (which I partly did).

The last few days have been incredible in the small cap world. Therefore, my watchlist was quite full this morning. On the top of this was LTBR (Lightbridge Corporation, Basic Materials Sector). LTBR gapped up more than 70% on patent news (not very impressive ones). I checked the fundamentals and fell more and more in love with the short trade. Firstly, LTBR´s fundamentals are… let´s say they are questionable. Secondly, with a float of well above 20 million shares, the danger of a pump was very limited. Thirdly, there was one incredible fundamental aspect to this trade. In March LTBR entered into an “At-the-Money Issuance Sales Agreement” with an aggregate offering price of up to $50m. This means that shares will be dumped into any spike. From the perspective of demand and supply, supply will greatly outweigh demand. I expected LTBR to sell off all day.

Recently NBRV was a similar setup. This is what happened to NBRV.

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My plan was to directly short LTBR when the market opened with a risk of the pre-market high. However, I did not think about the fact that LTBR most likely would not wait until the marked opened to sell off. Instead, after hitting a high of just over $2, LTBR grinded lower and lower during the pre-marked trading session. I was aware of this great opportunity and even though I had promised myself not to enter the trade premarket, I chased LTBR on weakness and shorted 2/3 of the planned size at $1.63. Of course, one may say that the decision to trade pre-market given the circumstances was mental flexibility and necessary in this case and I agree to some extent. However, I did chase weakness here which is not acceptable.

LTBR sold off more until the opening bell rang. At this point it completely lost it, selling off without even bouncing once. I took half my shares off at $1.43 and the other half at $1.33, leaving quite some money on the table. At the time of writing today´s low on LTBR was $1.11.

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Today, may chased entry was very bad. This is something I have been working on and I must not do this. Besides this I am very satisfied with today´s trade. However, I would have wished to be in this with bigger size. Today was a grade C.

Best,

Nils

Report Card #12

Dear L.,

another day without a trade. Since Monday the market has been nuts while I have been sitting on my hands. Today, I had a plan for NURO (NeuroMetrix, Healthcare Sector). However, my criteria were not met and hence I did not trade.

But let´s have a look at the opportunity. This morning NURO gapped up on news of receiving a $3.8M payment. Given the fact that NURO only had around $6M on their balance sheet, this news do not look quite as bad as other PRs we have seen recently. Nevertheless, I was quite bearish on NURO. Firstly, the magnitude of the gap was not justified in my opinion (from a close of around $1.25 NURO reached a pre-market high of $1.99). Secondly, NURO has been a supreme dilution play for years. This means that the stock sells of until they reverse split the stock. In there, the company raises money from time to time. This process continues and continues, only hurting existing shareholders. Below you can see a monthly chart ranging back years. Here you see that split adjusted, NURO traded at almost $6000 years ago versus around $1 nowadays.

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Given my thesis my plan was to wait for a morning wash and then short into the VWAP bounce with a risk of pre-market highs at $2.2. However, NURO directly sold off, thereby not giving me the chance to enter the trade according to my plan. As expected NURO was very weak all day, not spiking above VWAP even once.

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I am happy that I followed my plan today which does not mean that my plan was well chosen. Given the pre-market risk and the weakness that NURO had shown before the market open already, I probably should have shorted right at the open. However, this is hindsight now. Since I followed my rules and did not chase, I´ll give myself a C for today.

Best,

Nils

Report Card #11

Dear L.,

I did not trade today. However, there was a very impressive stock today that I want to talk about. This morning GEVO (Gevo, Inc., Basic Materials) gapped up on rather low quality news. My plan was to short into VWAP. Unfortunately however, GEVO is a low float and I was not able to locate any shares. In the first hour of the day, GEVO was very weak and VWAP rejections worked perfectly.

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When GEVO failed to make lower lows however and finally reclaimed VWAP, the trend completely changed. This is what happened up until now…

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A combination of shorts being squeezed and longs chasing GEVO has brought GEVO to a current level around $11.70 form less than $5 this morning. The pain of the shorts became especially apparent when GEVO broke $7. It seems as if some short threw in a market cover order since GEVO quickly jumped 50 cents on big volume.

I really hope that GEVO closes strong and that locates will be available tomorrow. In this case this may offer some great trading opportunities tomorrow.

Best,

Nils

 

Report Card #10

Dear L.,

I did not trade on Friday. Nevertheless, there is still an update on a trade on CHOOF (Choom Holdings Inc., Medical Cannabis Sector) that I made this week. The Cannabis Sector has been on fire in the last few months and on Wednesday CHOOF finally followed suit.

Breaking out of the 86 cents level, CHOOF reached multi months highs and closed at $1.04. I entered with a very small position size at 82 cents and held overnight. My plan was as follows: Despite the large gain I expected CHOOF to appreciate more in the coming week. Therefore, I decided not to take shares off on Thursday morning despite the fact that I expected CHOOF to have a weak day. Recently we have seen this pattern in the OTC sector. A stock breaks out and sells off the next day just to find its strength again on day three.

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Coming into the trading day on Thursday my plan was to stop out below 85 cents. I was ok with giving back my profits up to this level. CHOOF indeed was very, very weak all day, giving back most of Wednesday´s gains. It found a low of just above 84 cents, thereby stopping me out.

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Coming into Friday´s trading session I did expect CHOOF to bounce again. However, since this was rather a hunch than strong conviction, I did not put another trade on. My hunch turned out to be correct and CHOOF closed close to this week´s highs.

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While this trade is unfortunate, I followed my plan all along. I bought the breakout, accepted the sell off on Thursday, got stopped out and did not want to gamble on Friday. The only thing to criticize may be me stop level at 85 cents. I think that it was too close to the support level. The fact that I almost got stopped out on the low of the day closely demonstrates this.

Best,

Nils

Report Card #9

Dear L.

today was a pretty uneventful day in the markets. I took one trade according to plan though which turned out pretty nice.

NNDM (Nano Dimension Ltd., Technology Sector) is a trash stock we already have visited earlier this week. Since its gap up on Monday, it has been selling off. Today I thought that the most likely thing was some more sell off below VWAP.

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When formulating my pre-market plan, I decided to orient myself of the $2.46 overhead resistance level. When NNDM could not break this level in the first few minutes after the market had opened, I shorted the stock at $2.41. I tried to cover into the first was down to $2.3. However, there was not a lot of liquidity and I did not want to chase NNDM up again. After another VWAP reject, I was able to cover for a second test of the $2.3 level at $2.31. Later in the morning, I tried to re-short at $2.34 but I did not get any fills.

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At the moment it looks as if NNDM is headed lower. I´ll continue watching this and see if it can become an all-day fading stock.

Regarding my goals of more consistency and a better Risk/Reward, I think that I deserve the grade C+ today.

Until tomorrow.

Best,

Nils

Report Card #8

Dear L.,

after yesterday´s terrible trading, today was a quite good day. Three small trades – three small wins. This time I explicitly paid attention above all not to go against the plan that I had formulated pre-market.

So… let´s just get right into it.

This morning. On the top of my watchilst were three stocks.

The first one was CANF (Can-Fite BioPharma Ltd., Biotechnology Sector). CANF gapped up around 20% this morning on news of an analyst upgrade to $8.

Let´s have a look a t the daily chart to get a general feeling of how CANF has been trading in the past…

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This stock just toxic. It has been selling off for years and usually does not hold gap ups very well.

My plan was to wait for at least the first three minutes to get a general feel of how CANF was trading. Depending on the trading action, I wanted to short into VWAP with either a risk of pre-market highs of $1.62 or next resistance at $1.72. Close to the market open CANF already traded far off these pre-market highs which gave me more confidence that most chasers would bail out.

When the market opened, my plan worked out quite well. CANF fought at VWAP and I got short at $1.51. I must admit that this was almost a little chase again and I definitely could have gotten a better entry. When CANF flushed to $1.4 I covered at $1.42. CANF bounced to $1.47 before going lower. Here, previous support became resistance and I should definitely have put on the short again. However, I did not and left CANF for the rest of the day.

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GLMD (Galmed Pharmaceuticals Ltd., Biotechnology Sector) was the second stock I was watching. Yesterday, GLMD gapped from around $7 to $25 on admittedly very positive news. After reaching a high of $27.55 it sold off for the rest of the day. Both the positive news and the fact that GLMD had already been selling off for the previous day, put me a little off when thinking about shorting it today. Nevertheless, I was convinced that this would sell off more today.

I determined the $18.8 level as key resistance from yesterday and wanted to short GLMD into VWAP with this level as risk. The market opened and GLMD spiked exactly to this level, topped out there and started selling off quite considerably. Because I was busy with CANF I did not trade GLMD. The overall thesis seems to have been correct though.

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The third stock on my watchlist was VTGN (VistaGen Therapeutics Inc., Biotechnology Sector). VTGN gapped up on patent news this morning. The interesting fact about VTGN is that it usually does not hold gap ups at all. On the daily chart below, we see that just in the last weeks two significant gap ups were used to sell right into. Given the rather pathetic news today, I expected similar things to happen.

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VTGN confirmed my view and was very weak during the morning. But due to my CANF trade, I did not trade this either.

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The second stock that I ended up trading was SEII (Sharing Economy International Inc., Industrial Goods). Some pumper took advantage of the “incredible” PR that SEII would enter into a licensing agreement to create an internet site in North Korea to pump the stock in the morning. When SEII fell below VWAP I shorted at $4.44. To be honest, I expected the stock to quickly reach $4.2 but I guess that the manipulations continued and when $4.3 did not break I covered at $4.36. Shortly thereafter, SEII tried to break VWAP yet again. However, the tape seemed very weak and so I decided to put the trade on again at $4.48. Again, SEII was not as weak as expected and thus I covered at $4.4. A few seconds later, SEII spiked again. At this point I wanted to put the trade on for a third time. However, it was almost 11:00 and I wanted to follow my rule not to put on trades around lull.

Overall, I am quite happy with how I traded SEII.

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Given my overall goals, I would give myself a C today.

Let´s see what will happen tomorrow.

Best,

Nils

 

Report Card #7

Dear L.,

It is getting kind of embarrassing. I wrote about this before, and before but I end up doing the same mistakes again and again. While my overall thesis seems to be correct, my trade executions are just terrible. Especially today, this is very disappointing.

Today, I had two stocks on my watchlist that I planned to trade. The first one was NAKD (Naked Brand Group Inc., Consumer Goods Sector). Based on approval for a merger, which has been already known for a year or so, NAKD gapped up more than 40%. Longs chased NAKD up pre-market. But close to the market open, there were already lower highs. My thesis was that this was most likely to bleed for a considerable part of the day. I went into the market with the plan to short into VWAP.

And indeed, NAKD was very week when the market opened. I missed my entry at $2.19. When NAKD showed more weakness, I became more and more desperate to “just be in this trade” and chased the short, selling at $2.14. Just a minute later, NAKD spiked over VWAP, taking weak shorts like me out. I got stopped out at $2.3. Yet again I have to ask myself, why did I choose 2.3 as my stop? This was not a resistance level. There was clear resistance around $2.35 and the pre-market high was $2.44. Thus, a break of either of these levels should have been my stop. After having chased my entry at $2.14, I quickly decided that 2.3 would be appropriate though. There are two things to note here. Firstly, having chased NAKD put me in a very uncomfortable position with a very bad average. I did not want to put my stop higher than $2.3 because the loss would have been “too big” at this point. Instead I chose to exit at a completely random point (almost the high of the day). Secondly, no one was stopping me from thinking about my stop before the market opened. I really should have thought about possible entries and resistance levels here.

Summary: Overall this was a terrible trade with a chased entry and a rash exit.

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The second stock I was watching was NNDM (Nano Dimension Ltd., Technology Sector). NNDM was yesterday´s hot stock. For today I expected less interest in the stock and some fade given the fact that many longs were under water. NNDM opened and broke overhead resistance at $2.6 when the market opened. Later in the morning it fell below VWAP however and sold off down to lows of $2.3. I ended up not trading this stock.

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Given my goal of becoming more consistent and improving my risk/reward, today was a terrible trading day. Today´s grade is a F.

Talk to you again tomorrow.

Best,

Nils

Report Card #6

Dear L.,

here is today´s brief report card. Today, I had two main watches. My absolute priority coming into the market was IBO (iBio Inc., Biotechnology Sector).  Today a 1 for 10 reverse split was exercised. As I wrote in previous blog articles, all recent reverse splits were targets of chat rooms and turned out to be great short opportunities. Therefore, I located my shares premarket and expected some action.

Instead of pushing however, IBIO sold off at the market open. What I had expected did not materialize. I did not see any edge in trading this stock and therefore left it alone for the rest of the day.

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The second stock on my watchlist was EDAP (EDAP TMS S.A., Healthcare Sector). After this had closed weak on Friday, I expected a further sell off today given both fundamentals and technicals.

EDAP opened weak, pushed into VWAP and I shorted this move at $3.48. Then I covered the washout into $3.34 three minutes later for a little scalp. I had planned to reattack EDAP for more pushes into VWAP. The tape felt a little off however and therefore I decided to not short any more of EDAP.

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Given the fact, that I followed my plan today and executed my trades quite well I would give the grade C today.

Talk to you tomorrow.

Best,

Nils