The Tim Sykes Effect Explained

July 30, 2009 | admin | Comments 1

The Timothy Sykes Effect is the price movement he causes in most stocks when he does a buy/short or sell/cover alert.

Below is a recent trade where Tim broke even but his alert about getting out caused a small short squeeze raising prices above where subscribers were initially alerted.

Here is the time line of this trade. Please note that this is one of the few trades alerts that resulted in subscriber losses and the Tim Sykes Effect is not always so drastic. I use this chart, because it is his latest trade and the effect is very clear.

A: Tim Sykes shorts OHB at ‘3ish’ and starts his alert. Stock starts to quickly drop.

B: SMS Received at 2:25 7/30/09, most other members received alert around the same time. Members that could find shares get in mostly around $2.90

[Tims SMS Message]: Shorted 2,000 OHB at $3ish up from the low $1s just a few days ago. Goal is to cover in the mid $2s, stop loss in mid $3s.

C: First thing the next morning Tim Sykes covers his short at $3 basically breaking even and starts sending out alerts starting a short squeeze as members try to get out and limit their loss.

D: My SMS Received at 9:49 AM, stock is at almost $3.40. Some members get SMS a bit quicker and get out at $3.10+, Many members hang on an don’t cover hoping that the stock settles back down so they don’t have to take a large loss.

Each Tim Alert trade provides a learning opportunity. Fortunately for me on this one no shares were available to purchase from my broker so I was on the sidelines and observed. What you need to do is anticipate Tim’s move in or out of a stock before him. On this one he said his stop loss was at $3.50, but his stop loss numbers mean nothing, he quickly sells as soon as a stock shows any resistance, if your not ready, you’ll be left holding the bag.

This stock was still bouncing around at open the next morning instead of dropping like a rock, members needed to realize immediately that the stock is not moving in the right direction and get out before Tim did. Also, if you see all kinds of people covering on a stock like this get out because chances are you did not get the alert yet.

The above example is a worst case example. Even though the short call was not a good one, Tim got out even while members that did not anticipate his move were left with losses. Mostly, you will make less than Tim does or break even.

In my two months as a member, this is his first pick that was a flat out bust. However, it clearly shows the Tim Sykes effect that members need to be keenly aware of. In stocks with a large float and heavy volume there normally is only a small Tim Alert Effect, but watch out on low float, thinly traded stocks.

EDIT

Ding Ding!!,
Another alert just came in… Tim got in DDRX at 24.80, I’m in 300 shares at $25 a share. Only a 20 cent Tim effect, not too bad. Tim’s alert say’s he’s looking for a quick $2 or $3 gain on a short squeeze.

Ding Ding!!
Less than an hour later Tim is out with an 18 cent per share gain at 24.98. He says the sellers aren’t scared. Well I’m scared now and trying to sell but stock is dropping like a rock past my sell order…. Finally sold at $23 a share for a quick $600 loss. UGH I got killed by the Tim Sykes effect as I was writing this post for my worst drubbing as a member.

Perhaps Tim should sell a first alert package to 5 or 10 high rollers at $1,000 per month, heck I might buy one if I could get in on sure thing Tim Effect stock moves before his mass of followers get notified.

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