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Gold/Mining/Energy : Day trading in Canada

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To: Kevin Hamlin who wrote (794)	10/10/1998 2:02:00 AM
From: keith massey	Read Replies (1) of 4467

Warning - long message Kevin You have just given away one of my favorite trading secrets for penny stocks. However often there is not a block trade at the end of the tunnel. One of the key indicators I look for in a penny stock is a drop in price over several weeks on increasing volume. The first things when you find a stock with this type of chart is to look at who is doing the buyers and sellers for the past month or two. In Canada Stockwatch you can use trade workstation (I know that you already know this kevin but other people may not) If the buying and selling is coming from several different house then I proceed with caution. However if I find that only one house has been doing all the selling and several other houses (at least 10) are buying then I start watching and researching. Especially if the house selling has sold over 1,000,000 shares in the past month or two and several of the houses have bought 100,000 shares or more. I will often call the company and asks someone in charge (not the Investor Relations Rep) if they can comment on the selling. Some of my most best short term penny stock trades have been made using this approach. I don't consider these day trades but very short term holds (2 day - 1 week). The theory goes - if you have one seller and numerous buyers the day the seller runs out of stock or stops selling the price will rise. When many traders see a stock dropping on volume they often say to themselves - "if someone is selling tons of stocks there must be bad news coming out on the stock or the stock must have something wrong with it" However I look at this special situation in a different way. 1. If there was bad news coming out on a stock normally more than one house knows about it and the selling comes from more than one source. 2. If there was truely something fundamentally wrong with the stock more than one house would know about it and the selling would come from several house. 3. IMPORTANT I find it hard to believe that a single house would dump tons of stock a week or two before bad news came out on the stock. It would be too obvious that this house was trading on insider information. I am not saying that house don't dump on insider information but normally it is several houses dumping. If a house wanted to dump stock on insider information they would spread it around several houses, which is commonly seen. This type of trading strategy has not failed for me yet. The hardest thing to do in this type of situation is finding a bottom. Normally the bottom is indicated be huge volume with large blocks of stocks being bought. My latest success stories for this types of trade was BSX. 1. I started watching BSX at .25 when I noticed it selling on increasing volume of around 100,000 a day and dropping by a couple of cents a day. At that point all selling had come from the house 81 Gorden. They were the only sellers of the stock and had sold around 500,000 shares to 10 different houses over the past month. I did some background research on BSX at this point just to be careful. On August 5, 81 Gorden went into dump mode and sold 6.5 million shares in big blocks at .12-.13. At this point there were 17 houses that were net buyers and only 81 Gorden as the net seller of 7 million shares over the past month. On this day I bought a ton of this stock at .12-13. I also phone a few close friends and got them to buy. I very rarely give out stock tips to friend but this was a special case. That night I let S.I know about the stocks just to be fair. Subject 22386 Over the next few days the stock doubled to .24 and I sold half of my position and told my friends to lock in profits. When it hit .30 I sold the rest of my position and told my friends to sell. Little did I know that over the next month and a half BSX would run up to .70 on volume of 100,000 a day (600% gain). If you can believe it - my friends are mad at me for telling them to sell to soon. I guess a 150% on their money wasn't enough for them. So why would one house sell all of their stock - WHO KNOWS Could be a mutual fund dumping - a large investor in need of cash - someone selling off a cheap private placement taken down years before, etc., etc., Hope this helps people out there. If anyone see this type of situation happening send me a private message and if it pays out the beer is on me. Best Regards KEITH

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