My advice for current times (FWIW)
<< Ray seems to be very experienced in his day trading methods for saving money. If he suggests something, I will move on it. He is more likely to be correct than I am at this point. >>
Thanks for your kind words...
Read all my recent posts again before you follow what I'm about to say.
Also, have lots of grains of salt handy...
I am in panic mode, and I am NOT thinking clearly.
If you've been following my posts, you know I am not a dispassionate investor.
I would categorize myself as a passionate speculator or a gambler out of control.
I have gone to my "personal board of directors";
friends who aren't involved and whose judgement I trust,
and I've asked for advice.
I have not asked anyone for money, yet.
OK, I'm looking for an exit...
is there one in sight?
First off, what's going on?
Short sellers are having their way with the stock.
Yes, MM's are involved in helping the stock drop so quickly,
BUT THAT IS HOW THE GAME IS PLAYED.
If you don't like it, play somewhere else.
The result is that a lot of stop losses got triggered on Friday when GMGC hit $10.00.
That was why we dropped so fast so quick.
Stop losses are supposed to prevent losses,
but I have found that MM's create small, temporary,
1 hour dips in a rising stock to trigger people's stop losses
and make some fast cash.
I have repeatedly seen "stop loss clean-outs" on GMGC and other stocks.
That's why I don't use them. In hindsight, another log on the fire.
For early next week, they have created panic selling.
This will drive the price down more.
Monday will probably "Gap Down", like Thursday.
A lot of people are looking at their positions this weekend, like me,
and many people want to just get out, no matter what the price.
My father has told me to put in a market order for Monday's open for him.
My current feeling is that this is a mistake.
Gap down at open frequently triggers some bargain hunting,
and some shorts will take their profits,
and therefore a slight rise will probably occur in the stock price.
Just look at Thursday's day chart.
I believe Monday's exit point will occur between 10:45 and 1:30.
I also believe it will occur at a price of 6.25 to 6.75.
My hope and prayer is that it occurs at a higher lever.
The current situation goes beyond mere "stop loss clean-out" or panic selling.
I believe this is a "margin clean-out".
People who are in over their heads will be forced to sell, though not on Monday.
It is not clear to me whether or not I can sustain my
position through a "margin clean-out",
most heavy gamblers won't be able to.
A margin call gives someone 5 days to cover their margin borrowings with cash or hope for a price rise.
Many people received margin calls on Friday based on Thursday's closing price.
Many more will receive URGENT calls after Friday's bath.
Truly self destructive people will not have the cash available
and will not use the exit points provided.
They will sit and wait and hope that the stock will rise before they get forced out.
They are being hunted and they don't realize it.
Their brokerages will force them out.
At $12, in hindsight, GMGC was "over bought".
The margin clean-out will cause GMGC to become "over sold".
At a true local minima,
the MM will finally step up and support the price by buying
back all their shorts.
I believe they will also "double up" and take a large long position.
This will cause the price to rise, sharply.
It will also create another MM favorite, a short seller's panic.
Some of the public who shorted heavily at 10 or 12 will
still be in there, greedy beyond belief.
Now they will panic and buy, forcing the price up even more.
So the real pros will make money on the downside and on the eventual rebound.
Clearly, GMGC's MM's are true professionals (it is their livelihood, after all).
*** THE NEXT PART OF THIS POST IS MY TRUE FEARS ***
Where is that local minima?????
Someone mentioned a 200 day support level at 5 3/4.
That is possible (but I say its a 1 in 5 shot).
There will probably be some support at that level
on Monday or Tuesday (probably on Monday).
Technically, I've heard of "filling the gaps".
This is a phenomenon where gaps up which occur in prices of
rapidly rising stocks usually get filled at some future date
when the stock revisits a price level and "fills the gap".
GMGC has had several gaps, but of course I'm fearing that
2.25 to 4.25 gap which occurred in early March.
I went up $65,000 that day on an investment of $35,000;
so I do remember it.
My fear is rock bottom at that level.
In other ways it makes sense too,
because between 5 and 3,
GMGC becomes un-marginable and we achieve the ultimate margin
cleanout as people get immediately forced out of their positions
and prices drop further.
Now, I believe the MM would do serious damage to GMGC and his livelihood if GMGC goes below 4. But, this thought is intangible.
I JUST DON'T KNOW!!!!
*** END OF TRUE FEAR MODE ***
So, what are my possibilities as I see them?
1) Sell on Monday and take my losses,
loose all my original investment and be in debt
to the tune of $65,000 or hopefully less.
Pretty horrible, but do-able.
This is what I'll call the "Gambler's anonymous" solution.
2) Pony up some money, meet my margin calls and wait it out.
Given my request for more info from SI,
I'm clearly considering this option.
This is what I'll call the "Bunker" solution.
If I could be absolutely sure that GMGC would not fall below $4,
I would choose this option.
3) Sell on Monday, substitute another stock for GMGC
(which will maintain my margin position, at least initially),
come up the margin call amount ($100,000) so I don't get forced out.
Hope for the best in another stock.
I've repeatedly said I wanted to be totally out of the market by end of August as I thought September and surely October would be VERY VOLATILE (read mini crash).
True crash will occur next year before Y2K.
This is what I'll call the "Road to nowhere" solution.
4) Sell on Monday, substitute another stock for GMGC
(which will maintain my margin position),
pay up the full margin amount so I don't get forced out
and create a situation where I can buy a non-marginable stock.
Then, when GMGC is on the immediate rise again,
after its true local minima,
double up with the big boys and ride GMGC
up into profits at a $6 level.
This is what I'll call the "Out of control Gambler" solution.
So, long term, how long till GMGC stock recovers to 9-10?
I just don't know, that's why I'm asking for more info. |
