Thursday, May 8, 2014

YOD: Shorting the aftermath of a Pump and Dump for profit.

April 6 , 2014
$YOD trade diary.  I got short at 5.08 in A.H. after earnings.  They missed but it was bit up for a few minutes anyway.   It last closed at 4.09.  I believe there is more down side.

On Friday there was news of a partnership with Miramax for mobile.  YOD traded as high as 4.99 premarket but sold off quickly opening at 4.50.  It was met by heavy selling that pushed it as low as 3.80.    It then preceded to churn most of the day.  I don't believe that support at the 4 will be able to hold.  Each time it dropped below it came from a great distance which I believe reflects exhausted seller.  Note that the volume was not heavy below 4.   I believe that it was a few stop orders that triggered .10-.20 drops after that level rather than being seen as a target for short selling.  Should there be a push below 4,  $3.80 is unlikely to hold and this could fall very fast. 

 I'm targeting $3.30, which is where it launched before the pump. The MACD showed very bearish divergence on the second push to $7.00.  This should have been the sign that this was finished  to the upside.  But the bearish MACD keeps getting stronger as the stock falls. 

April 7
More selling, 4 broke but it felt more like a slow grind rather than the sharp sell off type move

I covered at 3.68, earlier than my profit target of 3.30 for several reasons.  First, the sell off was not very sharp today and was indicative of ambivalence more than panic.   Although I think it continues to go lower, there are better plays than waiting to squeeze every dollar out of this trade. Second, the overall market has been down pretty sharp.  There was some bounce movement in the momo players towards the end of the day, which could trigger a sharp uptick across the board.

Overall 5.08 - 3.68 in a week.  For a $1.40 gain or 38%. That's a home run. 

April 16, 2014

I reconsidered my belief about the grind, and re-shorted. After trading to the 3.30 range.  YOD popped back up again to 3.70.  I again shorted it finally covering at 2.38

Will it go lower?  Probably, but in the 2.30s I did not feel that it continues to make sense to hold the short position. It will probably be a slow grind to its death. But there are probably better uses of the funds than waiting for a 2.00 move, which may take 2 years.

No comments:

Post a Comment