Hey Everyone
If you have been following my emails then you know I sent one last week regarding the perfect chart setup in FNMA. As the overall market moved back towards its all-time high last week (after the January pullback), FNMA broke out above its breakout point at $3.36 and had an awesome move higher to $4.47. I took a large position in this stock before the breakout and I sold out at 4 preplanned price levels locking in substantial profits. I did this because you never know with certainty how far a stock will go. The only thing you can control is when you buy and sell and how much money you put into each trade, but fortunately, this is all you need to know to be successful.
My first sell order was at $3.75 when the stock hit the first area where a stock sometimes reverses after a breakout. Fortunately, FNMA was very strong and managed to continue higher to close above $4.00 per share yesterday. I sold part of my position at $4.00 just to play it safe right before yesterday’s close. I did this 2 days ago to lock in more of my profit in case the stock turned around and did the opposite of what pattern predicted it would. Because the stock closed very strongly I knew there was a very good chance the stock would gap up 2 days ago. The chart told me $4.20 was possible and that is exactly what happened and I ended up selling more shares that I owned this morning near the opening bell at $4.26.
In my last email, I predicted $4.00-4.20, but that was a bit conservative because I knew there was a very good chance it could go higher. I usually hold on to 1/4 or 1/5 of my remaining shares for one last target that sometimes is reached during large high volume breakouts (in this case FNMA traded 80 million shares which is about 240 million dollars of volume (which is very rare for OTCBB penny stocks). In these situations, I also trail my stop more tightly to make sure I don’t let all the gains slip away if I am wrong and the stock doesn’t hit the last target. My Last target range was $4.38 to $4.48 and the stock managed to hit a high of $4.47. I ended up selling my remaining shares in FNMA at $4.44 nearly at the top. A few minutes later the stock had a large sell-off dropping down to $4.11. This wasn’t a coincidence. I got out at the perfect time because my system told me that the stock was in the short-mid term sell zone.
Now that I am out I really don’t care what happens. On Thursday the stock had some news out about how it had earned $80 billion over the last 9 quarters all of which had gone straight back to the government since they were the ones that bailed FNMA during the financial crisis in 2008. The stock spiked up again today and is currently at 4.80 and could keep going to 5.00 or even 5.40+ in the short term. Somebody inexperienced may say “well what if the stock goes to $6.00, $10.00 or even $100.00? My answer is #1. “So what? I do not care what happens.
I extracted thousands of dollars in predictable profits and I am happy with what I got out of the stock, and I will just wait for the next setup to present itself. I am not a gambler. There’s no way to predict a press release unless you have inside information which I do not”. All I can do is control when I buy or sell and if I let greed cloud my judgment you can be sure I will end up a big loser. The fact is this stock moved a large amount very quickly and is probably ready for a breather at the very least. #2 “I am a trader and not an investor. I do not want to hold this stock for 2 years to see it can hit $6.00 when I can utilize my trading capital more efficiently by trading others stocks, and earn much more money in the short term”. Below is the chart with my exits.
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