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Stockhaven’s classroom 4/11/12

Explaining consolidation and what it can tell us; explaining how to sell a large block of shares in a penny stock — ticker analysis on PPTF, SPAH, ANTS, TLDG

The following is a text copy of the submitted questions (italics represent Stockhaven’s comments):

1.) In laymen terms what is “Consolidation” and how do you determine when its taking place. Perhaps an example.

price congestion 

consolidation is occurring when a stock (or an index or other security), after having made a directional move (up or down) then goes thru a period of time where the price doesn’t move in either direction by that much (up or down)

uptrends and downtrends happen north to south and south to north 

consolidations happen east to west 

the type of consolidation is different in regards to each time frame… you can have consolidation on the daily chart, monthly chart, yearly chart, intraday chart (5 min/15 min/60 min) etc… 

what does consolidation represent when it is occurring?

2.) How do you go about selling large blocks of shares in a penny stock?  I know if you put up a wall of sizeable shares on the ask it might kill momentum especially for bigger players such as yourself and the Doc. Is it better to do AON sells? I am trying to understand how to flip large amounts of money/shares in the penny stock world without shooting myself in the foot, whether it be a real quick  flip or a swing trade.  I assume if it’s a swing trade you would probably tell me just to sell blocks on the way up.  Please elaborate if you would.

this question is all about volume

on extremely liquid stocks like SEFE/SNPK/STVF/COIN — you can sell big blocks.. why? the more volume that’s trading, the less your volume matters 

on illiquid stocks — you’re volume matters much more… less volume means in a stock means that your position makes up a greater % of the total volume 

ex. UCHC traded $60,000 — I sold $2,000 worth of stock in 4 separate and equal sized orders on the way up as the stock was rising… in addition i put these sell orders in, as soon as i bought.. 

on the lower volume stocks, it’s very important to break your sell orders up and space them adequately 

if i want to sell 200,000 shares between .015-.017 — i’ll put 100k @ .015 & 25k @ .0155 25k @ .016 25k @ .0165 25k @ .017

you can put more shares at a more psychologically attractive price level because you can count on there being more demand at that price level.. therefore you can get away with providing extra supply 

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