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Diary of a Day Trader©: Inaugural Entry April 12, 2011

|Includes:Identiv, Inc. (INVE)

This is the first of what I hope to be many entries to come. Because it’s my maiden voyage, there are a few things you should know about me. My professional calling is writing and it’s the occupation I used to love like my high school sweetheart…until I found the stock market. I’ve been trading stocks for about 15 years. I’m not a broker and never have been. When it comes to trading stocks, I walk alone, just like in that Green Day song. That said, I’ve never quit my day job—freelance writing.

The truth is, I’ve had a couple of years where I’ve banked up to $100,000 trading, and several others when I’ve finished in the red—but I’ve never lost my passion for the game. Now I'm lucky enough to get paid to do financial writing and stock analysis, among other writing gigs. I hope that my daily trading diary entries will both entertain you, and perhaps help you hone your own trading skills. So let’s get to it.

This morning I awoke from a horribly jet-lagged sleep after a wonderful vacation in Italy.  Following 10 days of Chianti, Michaelangelos’ David, the Vatican and Italian drivers signaling their intention to pass on the Autostrade by tailgating at 100 mph, I was ready to dig in. With my confidence fueled by a nice pre-vacation winning streak at the equity betting windows, I felt sure the trend would continue.  I even felt kind of Roman about it: let the feast commence, and the orgy to follow!

Well, to paraphrase Borat, “not so much.” Like a young lover, the stock market’s affection can be a mercurial thing. Immediately the Barbarians gained the upper hand. Almost as if I had never made a trade before, I quickly bit off several positions at the open on a day when the futures market was saying that market conditions weren’t going to be so trader-friendly. And one thing I’ve learned pretty much above all else: when the overall market is in the tank, it’s simply harder to trade profitably on the long side.

Later in the morning, with a few new positions already under water, I watched helplessly as INVE, a semiconductor outfit, skyrocketed due to some Google-related news. I received an electronic alert that INVE’s shares were “in play.” At that point INVE was already up about .85 cents to $3.50. Now don’t get me wrong. I believe in buying high to sell higher, especially when shorts get trapped like they appear to have been here, but I didn’t want to risk anything with INVE’s stock price already at that level and the market in the tank. As I type INVE is trading at $5.75 per share!  That Green Day song is in my head again.

Meanwhile, several of my other plays, which I had been swinging for short periods of time, are either treading water or in the drink. Viking Systems (OTC:VKNG), an old favorite of mine, stalled after reacting positively to a bullish earnings outlook. In my heart of hearts I know VKNG will be a winner at some point in the future: being able to wait that long is the hard part for me. Another rule violation: don’t fall in love with your babies! If a trade goes against you cut bait before the losses grow. Inexplicably, irrationally, I still own VKNG. I guess I’m hoping that the Roman gods, or possibly even the Pope, will be looking out for my Viking here.

Thankfully, my positions in two turdy OTC stocks that probably aren’t even worth their weight in the paper they’re printed on (wait, they don’t even do that anymore, do they?) are at least near my buy price. A vitamin supplement outfit called Lifevantage (NASDAQ:LFVN) is slowly mowing down new 52s, and experience tells me that if it can creep its way to a buck, it might launch from there on a potent “dollar cross.” Another old favorite of the penny stock crowd, Horiyoshi Worldwide (OTCPK:HHWW), is also showing signs of life, bouncing off of 52-week-lows at the .40 cent mark. Shorts were all over this one when it inexplicably rose to $3.25 per share in December. Can anyone say “squeeeeeeeeeeeeze?” I’m holding this one overnight. That’s rule violation number three: try not to hold stuff overnight!

Gotta sign off for now. Hopefully I’ll be back tomorrow with more tales from trading land and a few choice tips for Thursday, if the market is willing.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: For the moment, I am long HHWW, LFVN, VKNG and my favorite baby, STVI.
Stocks: INVE