Three for Three on Thursday's Stock Predictions

Wow. What a day this past Friday (April 25, 2014). I stuck to my trading rules. Ended up holding only three position going into Friday morning, long positions in $LLEN, $BCCI and $BTCS. All for the intention of a gap up/ morning spike. I sold all three positions for solid profits. These were all predictable patterns in relatively liquid OTC stocks. I understand most people may not like trading OTC, but certain patterns can actually be very predictable. Here's a tweet showing my Thursday prediction.

Now remember, these were strictly GAP-PLAYS. Very different from making a swing trade. The plan was to sell within the first hour or so. Meaning for such plays there is no intention to hold onto them all day. The reason I make this distinction is because sometimes, stocks gap up and then fade through out the day when selling pressure hits. $LLEN was a good example of this. It had a nice morning spike up to $1.15. I actually sold a little too early on this one. But the stock later faded all the way down to as low as $0.70, before closing at $0.80. Remember, most OTC companies are frauds. $LLEN is no exception. But if you understand the right patterns, you can profit from the predictability. Below is a chart showing $LLEN action on Friday

So on the left is an intra-day chart on Friday (25/04) of $LLEN. As you can see, although it closed down on the day, there was certainly money to be made on the morning spike. Below is the intra-day chart from the previous day (Thursday).

As you can see from the chart, $LLEN had a very strong close. It actually closed very near its hod (high of the day). I made the call on the twitter the day earlier and was very happy to see people made money off my prediction.

Remember, stocks are simply trading vehicles. Always have a plan and be ready to take quick profits or cut losses when necessary. Good luck seeking alpha.

Follow me on twitter @rock_alerts for real time updates. See my twitter page for my disclaimer. I am NOT an investment adviser.

Trade Recap: Nailing the perfect Gap play

$PLPL (Plandai Biotechnology) is an OTC stock currently trading under $1.00. Like most otc stocks, it is not a company I would ever recommend as an 'investment'. But when the right setups present themselves, stocks like these can make great short term trades. On Monday 21 April, $PLPL caught my attention. It had a nice spike that morning and was breaking out over its highs in the late afternoon. As seen on the screenshot below.

  I took a screenshot on my phone as I was away from my computer when the breakout occurred. This type of breakouts can be great buying opportunities. I immediately picked up some shares for a long position overnight right before the close. As you can see the stock closed right at its highs - $0.79. This was a near perfect scenario for me. One of the common questions new traders ask me is, "How do you know that a stock would gap up/ spike the next morning?". There is no 100% correct answer to this question as I have no crystal-ball. But my answer is usually this - " if the stock market closed at 4.15pm EST instead of 4.00pm EST, do you think the stock would trade higher or lower? " Because in theory, the next 15 minutes after the market close is the first 15 minutes of the next trading day - especially considering most OTC's do not trade after hours. Now for a stock like $PLPL which was breaking out to new highs and making higher 'lows' - odds are the stock would trade higher if it had this hypothetical 'extra 15 mins'. You can also see the volume spike near the eod. I would always recommend caution when holding OTC stocks overnight - especially weed stocks. SEC halts have become quite common. Now I'll show you the chart  for $PLPL the next morning.

I forgot to take a screenshot of the chart earlier on 22/04, so that's why 23/04 is included in the picture above. But I took the long position on 21/04 so 22/04 (the left side of the chart) - was the next morning I sold. As you can see on the chart, $PLPL had a nice continuation the next morning. It gapped up and spiked all the way to $0.87 before falling all the way back down. I sold at around $0.86, a nearly 10% gain in just a few minutes. How did I know the stock would tank right after it hit $0.87? The truth is I didn't know that for sure. But I noticed a wall of sellers start to 'stack up' on the Level 2, so I decided to play it safe and sold. Remember the goal for the trade was to play it for a gapper / morning spike. So keeping those rules in mind - I really had no reason to hold it for much longer than a half hour or so, unless the Level 2 gave me reason to believe the stock could keep going. And in this case, it gave me no such indication. Hopefully this helps you guys, as I've been getting a lot of questions concerning Gap plays. Special thanks to @cactustrading and @kroyrunner89. They are 'must-follow' traders and reading their thoughts on twitter has really improved my trading. As always do your dd, and always keep learning. Good luck seeking alpha. 

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Why no one should be mad at HappyPennyStocks

My twitter timeline today was filled with angry 'investors' in HappyPennyStocks latest stock pick $VTPI. $VTPI (Vital Products) is just another OTC sub penny stock. For those who don't know who HappyPennyStocks is, he's a self-proclaimed stock promoter. He's last stock promo $CTTG had two big up days and was up over 2000% until it finally collapsed on the third day. Today's $VTPI was on the extreme end of what I like to call a 'Dump Promo'. You can see his promo video HERE. I call $VTPI a dump promo because except for the first ten minutes after the initial gap up, the stock tanked big time well below the opening price.

Like with most stock promotions, a lot of people got burned when the dump started. But is HappyPennyStocks really to blame? I mean he created this crappy pump, but I'm pretty sure he never held a gun to anyone's head to buy the stock. I personally have criticized him on twitter because he certainly has been misleading and offered a lot of newbies horrible advice. But at what point does personal responsibility come into play? As a trader, if you cannot evaluate yourself critically, then you are bound to repeat the same mistakes. People placing their buy orders 10%  above the ask price, got horrible fills. Others got in when the stock was up nearly 1000% and kept their fingers crossed hoping it would keep going...really? I mean how can you be surprised when no one wants to buy a sub penny stock up over 900% on the day. And as we all know, the stock market is a simple game of supply and demand. When the demand disappears and can no longer sustain supply, the stock tanks. HappyPennyStocks received a flurry of attacks, some of which became downright personal.

Although I do not support personal attacks, I was happy to see veteran traders like Modern Rock call him out. Hopefully people can learn from this experience. My biggest issue about HappyPennyStocks is I am still unsure what his full agenda is. First he makes a video talking about how this stock was 'going to the moon'. Then huge sellers come in and dump on everyone else, and now it turns out he 'never owned a single share'.

HappyPennyStocks did not disclose this in his video. Although this may or may not be legal, I wonder how Happy - Pun intended - his followers were to find out that the promoter of $VTPI didn't think it was a good idea to buy $VTPI. HPS (HappyPennyStocks) got caught in a web of lies thanks to some tough good old-fashioned twitter interrogation. At the beginning, he stated he was never paid to promote stocks.

 Well it turns out that was a lie. He was actually PAID to promote $VTPI. I am pretty sure failing to disclose this is illegal. But I do not expect the SEC to come knocking on his doors anytime soon. The crazy part of this story is the people who lost the most money on $VTPI today, will be the first to buy his next pick. All in the hopes of 'heading to the moon'

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