Tuesday, November 28, 2006


Wish I had more CBTE!

Up 0.8 percent today. Knowing when to sell is never easy. In fact it’s a lot more difficult than knowing when to buy. Usually with microcaps, if you sell after a 10 or 15 percent move, you can buy the stock back at your original buy price. But on days like today, when microcaps are in play, it’s a lot more difficult. Some stocks will make breakouts on high volume but then wilt after a few minutes, others will take off and keep going higher and higher. In hind side, it always looks obvious which ones you should have sold and which ones you should have held, but trust me, I’ve been doing this a long time, in the heat of the moment, it is impossible to tell. The fact is that there is a great deal of randomness involved. My view is that the best you can do is simply sell the stock as it goes up. If it keeps going up, you sell more stock. If it goes down, you always have the option of buying it back at a lower price than what you sold it for. Plus, this system doesn’t require you to sit in front of the computer all day. You just put in your limit orders and hope they get filled.

This was what I did with CBTE. I sold about one third of my position for $3 and another third for $3.60. The last third almost hit my target of $4.6, but no cigar. The price then proceeded to drop, so I am still holding this last tranche of shares. Unfortunately, CBTE was not a big position for me, so despite the big move today, it did not have a huge impact on my portfolio.

I also sold a little bit of EWEB at what turned out to be near the high of the day. I probably should have sold more, but I have a gut feeling that this stock is primed by a major pump and dump and I want to have a big arsenal of shares to sell if that happens. I also picked up shares in PDEX, DAGM, and SPOR. I wouldn’t say any of these stocks have amazing fundamentals but the fundamentals are good enough that I don’t think the stocks will drop substantially if the microcap fever exhausts itself tomorrow. In the meantime, all three stocks have the characteristics that traders are looking for (NASDAQ listing and tiny market cap).

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