Monday and Tuesday of this week proved to be solid trading days for my portfolio. Over the weekend reports that the swine flu in Mexico caused huuuuge hype in the markets, particular all the swine flu penny stocks. I knew going into the Monday’s trading day that I wanted to buy one of these speculative penny stock plays after seeing how they’ve reacted in the past, but I wasn’t willing to buy one at the pre-market prices, as most of the penny stocks in the biotech sector were up 80%,90%,100%+.

So I brought up my watch list of potential swine flu penny stocks and thought of my game plan. It was pretty simple: I figured that I would buy the penny stock that was up the least amount of % in the watch list. Make’s sense right? Well the lucky winner was penny stock NNVC.OB. To make things even better, this company released a PR that same morning that specifically mentioned “swine flu” in it. Now there was 2 important reasons why I knew this stock could really potentially make me some money.

1) This stock was only up 30% pre-market according to the bid/ask (remember penny stocks trading on the OTCBB exchange don’t have pre-market buying/selling BUT they do print the bid/ask before the market opens –effectively the same thing except no shares are actually trading hands during this time). Other penny stocks were up over 100%+, so I figured that NNVC definitely had room to run especially considering it was already way behind compared to other penny stocks in its sector.

2) The PR they released that morning before the market open specifically mentioned “Swine Flu” in it. Now this was huge because none of the Biotech swine flu stocks, even those that were up 100%+, had a PR that mentioned “swine flu”.

As the market opened I put in my order for 3350 shares @ 1.04. I immediately got 1800 shares filled but then this thing took off skipping over the rest of my shares. Unfortunately I got the rest of my shares filled at 1.12 thus giving me an average of 3350 shares at 1.08. You gotta be quick!

Ended up going to 1.25 before some profit taking took place, causing it to drop down…then seeing that the other biotech penny stocks were dropping I got scared and sold my shares at 1.18. Shoulda sold some at 1.25 as I was too greedy and wanted more, but on the same token I’m glad I got scared and sold at 1.18 because you can see in the chart below where it closed..Solid $335 profit, though.

Now lets head on to yesterday (Tuesday) when in my premarket watchlist I said that DDRX was my top potential short. This penny stock opened up green but stalled for the first 10 minutes of the open. I knew that it might be the turning point for this sucker to go red on the day. Sure enough 5 minutes later the stock went into negative aka showed the weakness I wanted for this to make it a great short. I have never seen a penny stock drop so fast, I literally went to my brokerage to enter the short order and this thing had already dropped 7%. I finally got my order filled for 476 shares short @ 7.34. Wounded up going down to 7.00 in the next 5 minutes but I wanted more. At this point it was just going to be toughing out a short squeeze that I figured wouldn’t go too far considering the stock was now on our side (the short seller’s). I went to math class around 2 to take a test, that I think I made a 100 on, wooohoooo! Came back and planned on selling this sucker by the close because I just didn’t like the spread between the bid/ask and the sideways price action all coupled around the fact that this was a earnings play that may not give me fast negative move like I want. I wound up covering my shares at 3.85 for a cool $227 off of a perfect green-to-red move that I fully detail in my FREE eBook. I really think this penny stock would be a good hold for a week or two because of the total unsustainable run up this penny stock has gotten. But the patience that I have (An 18 year old) just isn’t there yet!

Take a look at the chart and memorize this classic chart pattern that almost always makes you $$$$ shorting penny stocks.

As I pointed out early this morning before the market opened in my penny stocks to watch, SCON was up 150%+ on an obvious hyped/manipulated run because there were no PR’s hitting the wires whatsoever on this penny stock. Look at this chart and tell me this is not a screaming short. Penny stocks just can’t keep going up and up and this one was no different. It went up tooo much tooo fast so the game plan for the morning, yes game plan (you should all have one as I pointed out in THIS post) was to watch for any weakness and short the weakness. At the market open we got a slight gap-up in this penny stock but the postive run up only lasted 5 minutes..after that it was weakness as sellers came into the stock at full speed. About 9:50am SCON went negative on the day – this was the weakness I was looking for. Now, I didn’t get a good entry price as it was dropping so quick and the bid/ask was going crazy but I wound up getting my 1290 shares short @ 2.71. From there it was a classic death spiral of a hyped penny stock on green-to-red price action. Think about it: If I was a stock promoter/pumper and I had a huge long positon in a stock that has gone up 2 consecutive days over 150% and on the 3rd day it opens up and things are looking great then all the sudden it goes negative/red on the day (something it hasn’t done in days) panic sets in and everyone sells which is why green-to-red works so well when shorting penny stocks. I explain this pattern further and how to short these penny stocks in my FREE eBook that if you haven’t already gotten, you should!

It started on Friday when I detailed in my morning watchlist that penny stock MDVX was showing a nice 52 week high breakout over a stacked 4 month resistance at 2.22. The stock had closed the previous day at 2.25 with a day high of 2.30. On Friday morning I knew if the stock opened up at 2.30 or higher and displayed early morning buying pressure and increased bids then it would definitely be a buy. That’s exactly what happened as the bids kept increasing in the early morning aswell as the spread. The spread was actually pretty scary at times as there was a 10 cent spread at one point. So I went with my plan and bought 1400 shares (close to 50% of my capital) at 2.43 when the spread gap lowered. It actually went down to around 1.36 a little later in the morning so I coulda woulda got a better price…but I can’t control everything. Some afternoon buying kicked in at catapulted this thing to trade in a range of 2.50-2.55 all afternoon til the last 30 minutes of the trading day some volume came in and surged this stock up to close at 2.65! So now I was up a pretty good bit, but I knew with all this buying pressure coming in the last minutes of the trading day that there was sure to be a gap up come Monday morning because here’s a lesson: normally when a penny stock experiences late buying pressure it usually carries onto the next trading day.

My plan now was to sell first thing in the morning if there was a gap-up. See how I make trading plans? They’re essential to trading penny stocks! Don’t trade without one! And wouldn’t you know it, first this morning the stock gaps up 10% and I stuck to my plan and sold all my shares at 2.90. If you noticed MDVX actually closed at 3.13 so I left some more money on the table, but I wasn’t greedy, traded my plan, and made a nice profit so I couldn’t be happier! Make sure you check out my hot penny stocks to watch list tommorrow morning. Thanks guys!

Here’s the chart:

What do you think of this market? Pretty impressive strength today extending this 4 week rally! I took advantage of it an bought penny stock STSI on an perfect intraday breakout. STSI ran up about 4%  in the morning and consolidated nicely forming a clear resistance at 4.75 clearing the way for a break down or break out…fortunately it broke above the 4.75 resistance on a surge in volume (which is KEY in any type of breakout be it intraday or daily). From that point I knew it was a no-brainer, easy trade. I got filled for 729 shares @ 4.81 and my plan was to sell when I got a .20 profit, and shortly there after it reached 4.99. I sold half of my shares at 4.99 because in the back of my head we could breakout AGAIN and stair step higher. That was not the case though as it faded down a little more and I decided to unload the rest of my shares at 4.89 making a respectable $92 dollar profit in the morning. When you get the types of breakouts over a clear resistance with huge intial volume in the run followed by another volume surge when it breaks above the intial run’s high or resistance you’re odds are increased to around 70-80%. Here’s the annotated chart..

With the markets tanking early this morning it was everyone’s mindset to be short-biased for the day. The problem with big gap downs in the overall market is that a lot of the penny stocks that I’m looking to short gap down tremendously when the market opens. I have a problem with shorting penny stocks with huge gap downs in the morning because they’re already down so much there’s not much more profit to be made on the downside. PLUS it’s a riskier trade, and you’re vulnerable to getting juiced by the short squeeze from the early morning penny stock’s tankage.

One of the penny stocks from my 11 Hot Penny Stocks To Watch (posted early this morning before the market opened), EVK, broke down early morning and busted through the key level support @ 2.20 and tanked further. Too bad I was preoccupied and didn’t catch the break of  the price support. Though only 10 minutes later the shorts got squeezed and the price bounced right back up to the support line. I watched this squeeze and determined that I would short NOW as I realized the penny stock was struggling to go up passed the 2.20 level(which now was resistance).

Unluckily as soon as I put in a market order the stock began to slip down as my order was accepted. I wanted to short at 2.19 but my 1,160 shares were filled at a 2.06 average. Some time went by and the price drop I expected never really came around. In the early afternoon it slipped down to 1.97, this is when I decided to close out and collect my small $108 dollar profit. I chose to close out mostly because for nearly 2 hours prior to this it traded ONLY 100 shares! YES – an illiquid stock! This is probably the most illiquid penny stock I’ve ever traded and it scared the hell out of me.

My instinct was correct and shortly there in the late afternoon EVK climbed up to 2.33! I got pretty lucky when I decided to close out my position as only 2,260 shares were traded at the 1.97 price range, 1,160 of those were mine.

Here’s the chart with some blurbs: