How I Shorted Penny Stock EVK For A Profit

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:

Tweet This Post!