Operation Salvage 2010

The good news is that, as of the market close on September 17, my portfolio is out-performing the S&P500 by 20%, and that's in spite of the smattering of large red blemishes I alluded to in a previous post.

The not-so-good news is that because of those poor trading decisions made earlier in the year, I'm $200 in the red for the year in terms of realized Gains and Losses as I continue with Operation Salvage  — my attempt to jettison my no-hoper stocks (at the very least the OTC/BB ones) and still end 2010 flat or with profit.

The plan is a two-tier one, concerning on the one hand those stocks where I am in the hole to the tune of a minimum of $500 but have some hope of either trading my way out or actually getting back to even through the company's own performance  — e.g. Acadia Pharmaceuticals (ACAD), TriValley Corporation (TIV), Helicos (HLCS), Sunesis Pharma (SNSS) — and, on the other hand, those stocks where I don't anticipate ever getting my money back —  e.g. Anthracite Capital (ACPIP) or the four dead-end OTC/BB stocks I hold. Priority is obviously being given to the latter category of stocks which I will probably keep in case, by some chance, they get pumped at some point in the future and I can make some money back.

Since that prior post, I've taken advantage of a pop in one more penny stock to offload my holdings there, taking my tally to three. Providing I play the FDA run-ups right, I have potential gains from JAZZ and ALXA that would offset another two of my losers, leaving me in a decent position to complete phase I of my 2010 mission by year's end.

With a bit of luck, in some of the swing-trading positions I'm currently working, I might be able to hit that target even earlier and start working on phase II as well. That is requiring some patience, however, with none of NLST, CPE, HAUP, FSII and now CIGX, a swing position I opened today, moving how I want them to yet. All have plenty of upside potential and a history of moving nicely, though, and I'll be looking to capitalize on any pops to book profits as they come.

HAUP (Bought at $3.04)

NLST (Bought at $2.79). The medium-term case for NLST is bullish, provided it holds that ascending trend line and completes the big wedge that's been forming over the last few months. If I have a concern, it's that the stock has been grinding along the moving averages and giving back gains on short-lived pops at a time when the broader market has been performing fairly well and testing overhead resistance.

If the market fails to push through 1130 on the S&P500 and heads to the bottom of the trading range established over the summer, it'll be interesting to see if NLST hangs steady above 2.65-ish and that rising support line. If it can, it sets up for a bullish break above 3.60 towards the end of the year.

Penny pick hall of shame

It should be noted that I have made money from penny stock pumps but, criminally, left plenty on the table and allowed myself to get stuck in some deep holes.

How? Well, it's a case of "this is a dip and the stock will recover soon," or "the pump isn't over, there's bound to be another pop," or "technically, this is due for a turnaround"... the usual story, only in OTC/BB land, there often aren't any recoveries. Stocks are manipulated by market makers, driven down by shorts, and bloated by dilution by the companies themselves.

A couple of the plays in which I've ended up deep in the red were bought on big intraday pullbacks, others at the time of the alert, but dilution and/or aggressive shorting took hold and there was no recovery... just a gradual decline and increasing paper losses.

Here, then, are the losers I've dumped so far and those that I still have to get rid of:

Stocks dumped:

BROE - $305

SGDH - $701

Total $1,006, off-set by gains in JAZZ, August 2010

AGRT - $630

JEDM - $780

Total $1410, partially off-set by $100 gains in CIGX, September 2010

Still holding:

AVVH - $650

BEDA - $910

FWTC - $857
ENTI - $576
Total 2,993 - ouch!