Trade #97 – Misguided Focus

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I’ve been following $GBSN for about 2 or 3 months. I’ve gotten to know a lot about the company and why the stock is so beat down. When they released their 2015 Q2 earnings it was discovered they took a 24M loss due to financing charges. The company has sells and a product being sold that works.

They also have a few FDA approvals that could be announced in the coming months/years. Currently the company appears to be looking for further outside investment. Next month the share holders will vote on a measure that will dilute the stock by added more shares.

The stock price has been hanging around the $0.06 level for quite some time. I thought it would be safe to buy at $0.06 with earnings soon to be announced. I mean how much lower could it go? I purchased shares of $GBSN last week in my Robinhood and Sure Trader account. In the past I’ve seen this stock jump a few pennies on news.

I thought for sure that a good earnings report would send this stock to the moon. Wrong! After the market closed yesterday $GBSN announced their Q3 earnings. An astonishing 33% increase over last years Q3. Instead of the stock going up, instead it went down.

Not really sure what to make of this. A company with sales, that appears to be trying to get their act together somehow went down on a great earnings report. I have a theory as to why the price dropped. Next month they vote to dilute the stock.

That could be scaring people away.

Whatever the case, I bailed on my Sure Trader position at $0.07 for a one cent gain. I also sold 3/4 of my Robinhood position at $0.065. I holding onto the rest at $0.062. I don’t like playing penny stocks, but the allure draws you in. Big position, big possible payout!

I’ve traded $GBSN a number of times and I can now tell you that its not worth it. One of the purposes behind documenting your trades is that you get to see what works and what doesn’t. Playing these lower end stocks does not work out very good for me.

I feel that I should be focusing my attention more so on stocks that are moving. Today there were probably a number of stocks that experienced $0.25 to $1.00+ price moves that were within my price range. Instead I chose to stare at $GBSN most of the day.

In the video below you can hear me allude to seeing large order sizes being printed on the Time and Sales. 25,000 to 100,000 shares at a time where going through without being broken up. If you buy 1000 shares of any stock, its normal to see the order go through Time and Sales broken up into 100 or 500 share chunks.

It looked to me that someone had a ton of shares they wanted to unload. Mental note, when the price is suppose to be going up and EVERYONE else thinks the same, watch for big sellers. Another reminder is to stop being so optimistic on news or upcoming earnings.

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