I found something new out today. Certain stocks (like BVSN) are not marginable, meaning you can only use the cash that you have in your account. This actually ended up helping me more then anything today. I tried to short SVVC on Tim’s alert and got a buying power error because I was trying to use margin. After contacting support I found out all that information. Well I missed the trade, but as I said it helped me more then hurt since the stock ended up going up. I later turned my focus to BVSN (Find my research and thoughts on the stock here). I was bound to be ready for any spike today. Which to my luck happened arond 10:35. Nice big spike to $23.81 for a new high on the day. I got my short filled at $23.37 but since the stock isn’t marginable, I was only able to get 90 shares of it. Ya, not a lot but considering how much room this has to drop, I was not too worried. I held for what I like to think is a long time (over an hour). It dropped a bit and on the second drop, I tried to cover in the $22.30’s but I missed my fill and it spiked back up to $23 where I covered for a measly $33.30 gain. The spike might have been caused by Tim’s alert that he covered but thats neither here nor there. I panicked on the spike and took a very little profit instead of letting it play out. What a waste, I should have held it longer because this thing ended up dropping to $21 at the end of the day. I shorted it into the close at $21 and I am holding overnight. It closed red on the day which could lead to a nice morning panic. The goal is to have the panic break $20 (support) and drop into the teens. That may not happen tomorrow but it is bound to happen soon. I am glad to be short just in case their are no borrows available tomorrow.
BVSN’s earnings came out last night and they were abysmal to say the least. Check out my post on it here, as you can see Tim nailed the facts dead on in his post. At about 9:55 Suretrader sent a system message saying they had shares to short of BVSN. The price started dropping as people shorted the stock and chased. I waited for a little bounce and shorted around 21.98 and I ended up covering within 2 minuets at 21.58 for a $105 profit. I am a bit mad at myself for selling so soon because I could have easily made double or triple that, had I waited a bit. This is part of the learning process of trading though.
As you can see in the daily chart from Friday, it had another spike in the afternoon. I did try to short around $23.50 but missed my fill, so I sat that round out. The rest of the day was choppy. I do believe I am going to regret not shorting and holding over the weekend for multiple reasons. The first is the obvious one of possibly no shares to short. The other is the weak close could end up making it gap down and panic in the morning. But we will see come Monday morning. I plan to trade BVSN again on Monday if there are shares to short again. This stock is still up 2.5x from where the pump started, so their is still a lot of room for it to crash.
GENE or Genetic Technologies Inc., has a history of randomly spiking for a couple of days on no news at all as you can see from their chart.
Although it is unknown why the stock spikes like it does, we could go out on a limb and guess that it is being manipulated in some way. Timothy Sykes had GENE on his watch list this morning due to the 23% rise in price the previous day. Since I know GENE has had a history of spiking and the price falling back, I reserved some shares at Suretrader pre-market. I only got 600 shares but it was enough for my liking. If I needed to add more I could just open a ticket with the support desk and they would place it since it is easy to borrow. My thoughts going into the open were to short the morning spike which I knew was coming. I decided to make sure that the spike wasn’t going to keep going. It made a higher high but failed to hold that high at which point Tim shorted it before I got my order in. I decided not to chase it down as I know if you are not right on the ball for his alerts, they can swing in one direction or the other fast. As the price rose back up, I managed to short my 600 shares at $4.84 (better average then Tim at the time). It spiked a little then dropped back down. I started noticing a trend on the stock of higher lows each dip. That is when I decided to cover my short at $4.76 for a measly $48 profit. Since I used Tim’s name when I opened the account, the trade was completely free so that is my actual take on the stock.
Later in the day I traded it again when it stated bid whacking $4.50 (support). I covered for .04 cent gain (luckily) but it proves the point that you have to wait until that support breaks and not assume it will. Good lesson to learn.
I am currently looking to short the stock again when the $4.50 support breaks. This is bound to go back down to the $3’s in the next week or so but could still spike before that ultimate drop.
BroadVision, Inc. (BVSN) is currently the best pump and dump out there. The stock is being pumped by a promoter named Jonathan Lebed. He created a so called news letter called the National Inflation Association which is linked to many many other pumps. I plan on doing a full blog post on Jonathan Lebed in the coming weeks but for now I want to focus on the stock itself.
Credit to Timothy Sykes for his research report here: Exposing Convicted Penny Stock Manipulator Jonathan Lebed Of The National Inflation Association’s Latest Pump & Dump. Tim basically explains a lot in the blog post and I have summed up some points to better show why this is such a scam.
- BVSN’s revenues have dropped 20%+ each of the past few years
- They (NIA) compare the stock to the likes of Facebook and Jive Software
- Stock has risen from 8.20 to $32 (as of today) bringing the market cap from $37 million to $140 million in a little over a month
- NIA’s disclaimer: Disclaimer: “NIA owns 151,900 shares of BVSN that it purchased at an average price of $9.2639 per share. NIA agreed to a 60 day holding period on its initial position of 122,000 shares starting from the date that NIA first suggested the company, but NIA intends to sell these 122,000 shares at some point in the future after the date of February 12th, 2012. NIA intends to sell its additional 29,900 shares of BVSN in the future and can sell them at any time. NIA’s co-founders have also been referred business in the past from somebody who has filed as a large BVSN shareholder.”
- Finally in Tim’s blog post, read his 9 paragraphs exposing various lies in the promoters campaign.
As you can see Tim did a great job showing how this stock has been manipulated. One thing I wanted to add to Tim’s research would be how some information may be truthful but is still deceiving. I just want to explain in a little more detail how this pump could be working.
Please note the below is merely a theory I have and could have no truth at all:
In NIA’s disclaimer, they state that the shares that are held (122k) can not be sold until after Feb. 12th 2012. This is written as a disclaimer and I believe has to be somewhat truthful for the main reason that it would throw a huge flag to the SEC. Instead of risking that, the NIA could be utilizing other money to buy more stock. The hedge fund that Lebed mentioned may or may not be true but not in the way he brought it to light. Lebed and NIA may be partnered with a hedge fund. The hedge fund most likely bought a crap load of shares before NIA’s announcement and pump. They then in turn would release the pick and let the price rise, keeping certain key support levels holding. Once they get the stock where they want, they would start to unload their shares at the hedge fund and the stock would crash. But not before they sell all their shares making millions (way more then they would have made with just the 122k shares). This would most likely happen before Feb 12th. The reason is, I believe they will try to double dip. I believe they will re-promote the stock with some exciting false information that will likely spike the stock again and allow them to sell their final 122k shares they had to hold. Making the whole thing look semi legit to the SEC. When in turn, if someone just took a minute to review the stock, they would see all the smoke and mirrors.
I hope that better explains BVSN and what I believe will happen with the stock price. I plan on shorting it once I see it start to weaken, that is if any shares are available.
Update coming soon…
I first came about Suretrader when I was switching some money over from Speedtrader to BroadStreet. When I was talking to a representative, he asked why I was moving my money and I told him that I was looking for more leverage as well as to get out from the PDT rule. He mentioned Suretrader and since I was already in the process of transferring my money to BroadStreet I decided not to look into it very much more. A few months later the name came up again in the Investors Live chat room and I started to do a little more research on it. I found out that Tim Sykes was announcing his newest preferred broker in a couple of days so I figured I would wait to open a new account. Come to find out the company I was looking into ended up being Tim’s preferred broker.
To get to the actual review portion, Suretrader’s account opening was pretty painless and easy. A basic application that asked a few odd questions in regards to references but I later found out that it was because of Bahamas laws. Speaking of that, yes, the company is based in the Bahamas. Also the company is owned and operated by the same person that started Speedtrader, Guy Gentile. Once you finish your application, they ask for two forms of ID as well as a current utility bill. All of which can be uploaded to a drop box right on the application site. A day or so later they will send you funding instructions. I wired my money around 12pm and received a confirmation that they were funding my account shortly. I was up and running a day later. In my opinion it was very fast and easy.
Suretrader utilizes the DAS Pro software like its sister company Speedtrader. The DAS Pro system is fairly easy to learn and a bunch of brokers seem to be using it now. Suretrader offers a huge amount of leverage in the likes of 6:1 and only has an account minimum of $2k. This paired with extremely low commissions of $4.95 a trade (up to 1k shares and .00495 there after) and $4.95 + $1 per option contract. These are some of the lowest rates out there.
One of if not the best feature a Suretrader account gives you, is not being under PDT no matter how much money you have. That is right, no more $25k minimum to be able to day trade to your hearts desire. But along with that comes responsibility because lets face it, it is very easy to over trade. Trust me, I have done it.
Since Suretrader is located in the Bahamas, this allows them to get around the pesky rule of shorting stocks under $2.50 a share. What does that mean? Well for US brokers, they are required to charge you $2.50 a share to short a stock under $2.50. So if a stock is $2, you still pay $2.50 a share to short it. .10 cents, still pay $2.50 a share to short it. It can become costly when trying to short stocks that are only worth pennies. Well with Suretrader, they drop that $2.50 to $2. Doesn’t sound like much but it consequently allows you to short 1/5 more then you could have previously.
I would also like to mention Suretrader’s borrows. They have great borrows for many stocks including those under $3 . They clear through multiple firms allowing them to find shorts on many stocks other brokers are unable to. This is also up there as one of their best features. I heard they are trying to add even more clearing firms to allow for even more shorts. If they are able to accomplish what I think they can, I do believe they might be the single best broker out there for shorting penny stocks.
Last thing I will mention, not necessarily about Suretrader themselves but about having an offshore brokerage account in general. Please read Michael Goode’s post about overseas accounts and some of the tax implications. It is very helpful for those who may not have looked into it for themselves.
All in all, I give Suretrader a 4.5 out of 5.
Update coming soon…
I first heard about Speedtrader from Michael Goode who is the chat room moderator for Timothy Sykes. My experience with speedtrader has been nothing but good so far. They have a low minimum of $2k to open a margin account. They also have two options when you open an account. Plan A is per trade at $6.95, one of the cheapest around. Plan B is per share starting at .0039, with a minimum of .99 cents. Both plans are negotiable based on the number of trades you do and how much money you have with them. They use the DAS Pro software package and charge you for it. To get all level two of Nasdaq and Pinks, you are looking at about $150 a month. The nice part is, if you use that much in commission for the month then they waive the software fee. I was decently surprised at the amount of stocks that were easy to borrow at Speedtrader. They don’t have any under $3 a share but they came through big for me on some, like ORS.
All in all, I give speedtrader a 4 out 5 as a broker.