Method Four: A Few Minutes of an Ultra High Volume Promoted Stock
Before I get into this method, understand you never, ever hold a heavily promoted stock anywhere after 12:30 PM ET. If you do, you are likely going to lose.
WARNING: SOMEONE IS TRYING TO PLAY YOU FOR ALL OF YOUR INVESTMENT IN HEAVILY PROMOTED PENNY STOCKS!
You have to analyze the charts on the heavily promoted stocks when they break from barely trading to suddenly trading in the millions. You need to understand that somebody is going to be selling into the momentum – without exception. I REALLY MEAN IT, WITHOUT EXCEPTION THEY ARE TRYING TO PLAY YOU.
These guys are usually working outside of the United States. That’s why they can even get away with this. The company being traded is not necessarily complicit with this. Sometimes it comes as a shock to them. So completely shocking that they go into extreme panic. I have several funny stories here, but my favorite I will quickly share as an aside:
Aside: Heavily Promoted Stock Explodes on Day of an IR Video Shoot
I used to do a lot of video shoots at companies. One of them that hired me and scheduled the shoot was a company with some transport device for a medical perishable. I won’t get into too many details as to what company it was.
They thought of me as the owner of “the video company” that was coming to do a video shoot to show off them and their product for investors. I was watching their stock shortly after the open as I do when I have clients. I told them of the huge volume kicking in. I realized very soon, “oh, this is a huge promo campaign stock.”
The key execs at the company were getting calls from everyone. I was there a couple of hours. I was laying out how this was going to be done. We were deciding who would be interviewed. I was planning the product shots. I was sitting with them and they kept being pulled out of the meeting.
I had paid a camera operator to do the shoot, along with an editor who would be putting the final product together. They didn’t get what was happening. They wanted to start shooting. They wanted to get this done in about four or five hours and move on.
Finally – they said to me. “Let’s put this off. Don’t worry about the money. You’ve already been paid. Let’s do this in two days.” I saw absolute panic on their faces. The CEO told me that he had no idea that the people he was working with were going to do this to their stock. It was massively up on huge dollar volume. I remember thinking when I looked at the product, “this is not a $50 million market cap company.” But at that very moment it was… mathematically speaking.
Back to Method Four, also in progress….
Playing super high volume promoted stocks is exactly the same as playing musical chairs. The only difference is that when the bottom drops out if you are still in the chair (holding shares), you lose. This is their plan. They want people to buy into the momentum, build the momentum, keep up the excitement, and finally they start to sell into the momentum (while they are still pretending to love the stock). It’s all fake.
Here’s how it all works:
- Part of the build up is that the people behind the deal, usually out of the country, start the day by actually buying their own stock to create a huge momentum.
- People like you see this. You get excited. You think, “It’s on!”
- You get so excited that you wait about an hour or so and make sure its real. Then you start buying.
- Minutes later you have a 30% gain.
- You buy more at the new, higher price. Wow, you are up slightly more in dollars.
- Then the noon hour hits. Panic creeps in.
- Some sell, it loses instantly 50% off the day’s high.
- You’re now even on the day. You stick it out.
- You remember that one that went all the way back up and then doubled again before the close.
- By 2pm you have lost half of your money.
- Do you take the loss? Do you average down?
- You buy more near the close.
- After the close you pick up your daughter from school and think, “Wow, I could have funded a year of her college with what I lost in the market today. I better average down in the morning.“
The only way to win here (besides not playing the game) is to get to know who the promoters are behind the pump. Not personally, but who the group is. Are they are one day group? Do they do things over weeks? Do their stocks tend to fall apart in an hour?
Look at the websites where it is being promoted. See who the third party hiring them is. You have to do your own research here. These guys are very sensitive to me saying which groups fall apart when. Some hate me for what I write. Threats? Had a few.
What you are looking for is one quick in and out trade. Be in it no more than 60 to 90 minutes. Wait about ten minutes before putting in a sell order GTC at a limit price about 25% up from where you bought. Then put that sell order in. By the time 90 minutes is up, close that position out. Don’t even look at that symbol for another day. Do all of this in the first three hours of trading. After that you are asking for trouble.
This is highly, highly speculative. The bottom WILL DROP OUT. Play it for entertainment, not to help pay your mortgage!