. . . . . . . . . . .ON PUMP & DUMP. . . . . . . . . . .
. . .
I usually don't bother opening any email that looks like a
newsletter or endorsement for a stock. . . but for whatever reason, I
happened to open one this AM. . . a couple of penny stocks literally.
This is how you spot a pump and dump. . .look back several months. . .
was the price considerably lower. . .like under a nickle or even
under a penny? Was there considerable volume then, but has since
dropped off sharply? . . . to nearly nothing? Then a bit of volume
hits it and the price begins to rise. . . .
This often indicates a pump and dump scam. "Penny Stock Promoters"
are often paid literally millions of shares of stock to advertise the
issues in their newsletters. Now a penny stock under a nickle can
often be rewarding when it gets some momentum. However, the promoters
are not concerned with the company or the stock. . . they just want
their money. . . so they are holding millions of shares that were paid
to them. . and/or that they purchased at say .005. . .and now they
just want that bid price to reach and hold .05 so they can have 10
times their money. . . and if they set a target of .25, and are able
to prop up the price above .20 for a while. . . they get 40 times
their money back.
So they promote the stock. . .buy a few shares to help support any
upward movements. . .then announce some sort of news item that the
company has told them about. . . but their is always some event that
is MORE important just off in the future a week or so. . . .Why?
Because this is how they hold that bid price up above their REAL
target exit point long enough for them to sell all their shares to
unsuspecting suckers.
Momentum gets the ball rolling for a while. . . then a pending news
announcement sparks the big gains. . .then the blitz by the newsletter
writers comes in. . . "don't sell until Monday. . . there are 20,000
new investors coming in then" . . . or "takeover news coming on
Monday" or "big news coming on Thursday. . .you'll be sorry if you
sell too early."
All of these are meant to work on your sense of greed. Say you bought
in at a nickle and they have managed to push the price to .10 X .12 .
. they know good and well that if investors believe that is all there
is, they will sell for the double. .. so by getting on Raging Bull or
Yahoo and screaming about how tens of thousands of new investors are
coming or that there is some fantastic pending news announcement or
whatever the event. . . nearly all those that bought at .05 will hold
past .10 . . thinking they can get .15 or even .20 . . .
But again these promoters are only concerned with getting out . . .
especially at the highest possible price. . . so as new buyers come
in. . . they sell just enough of their shares so as not to tank the
stock. . . but in order to successfully dump nearly 4 million shares.
. .the stock needs "propped up" for several days. And that is where
the pending event comes in..
In this mornings hyped up email. . . two stocks were mentioned. .
.here is the email I received:
==================================================================
>>> STOCK PICK OF THE DAY <<<
1st Penny Stock Pick For Monday, 12-27-99
SDVR(US) [with a link to current info]
Target Price: $0.27 Current Price: $0.05
2nd Penny Stock Pick For Monday, 12-27-99
PLYI(US) [with a link to current info]
Target Price: $0.28 Current Price: $0.04
Take a close look at both of these stocks, they're on the rise!
=============================================================
Now the first thing everyone should do when even remotely considering
such a play is this. . . check the historical quotes. On AOL or Wall
Street City or other services, is a service whereby you can dig up
historical quotes on ANY stock.
Below are some DAILY quotes from AOL going back 500 days. Notice
first how little both SDVR and PLYI have traded in the past year.
Most days of the year saw NO trades whatsoever . . . as though they
have barely existed. Then suddenly beginning in September, 1999. . .
BIG trades. Remember, there are many companies in existence, whose
sole purpose of business is to sell to suckers, as many shares as they
can at the highest price possible. I am not saying that SDVR or PLYI
have done this or are planning to do this. . . .I am merely reminding
the reader that it happens every day . . and to beware of such things.
Now notice how during the final days of September an enormous amount
of shares were traded with no significant change in price. . . notice
how the last week shown had a far less amount of volume than that 3
million + week, yet saw a significant rise in price. . . . but notice
mostly and finally that we were never offered to get in at the .01
price. . . no, we were only told about the company AFTER it hit .05
or so. . . .making it a 5 bagger for the Pump and Dumpers right off
the bat. . . PROVIDED they can prop up the price long enough to sell
all their shares without tanking the stock. See how it works?
Here is the weekly historical chart for SDVR:
SDI VIRTUAL REALITY CP
Prices Available: 08/22/96 through 12/23/99
Ticker: SDVR
Date Volume High/Ask Low/Bid Close
-------- ---------- ---------- ---------- ----------
09/11/98 5,000 0 0 0
10/26/98 17,000 0 0 0
12/29/98 15,000 0 0 0
03/12/99 29,000 0 0 0
04/06/99 9,000 0.02 0.02 0.02
04/27/99 8,000 0.02 0.02 0.02
04/29/99 1,000 0.02 0.02 0.02
05/14/99 4,000 0.02 0.02 0.02
06/02/99 39,000 0 0 0
08/20/99 10,000 0 0 0
09/14/99 400 0.01 0.01 0.01
09/24/99 914,900 0.01 0 0.01
09/27/99 10,800 0.01 0.01 0.01
09/28/99 927,900 0.01 0.01 0.01
09/29/99 927,900 0.01 0.01 0.01
09/30/99 927,900 0.01 0.01 0.01
10/01/99 927,900 0.01 0.01 0.01
10/19/99 1,000 0.01 0.01 0.01
10/25/99 10,000 0.01 0.01 0.01
12/22/99 5,000 0.02 0.01 0.02
12/23/99 190,000 0.05 0.02 0.05
Here is the DAILY historical chart for PLYI: . . notice the incredible
similarities. . . nearly the same quantities of stock were traded on
nearly the same days in September/October!!
And hardly any shares were purchased at any other time.
PLAYNET TECHNOLOGIES INC
Prices Available: 09/01/99 through 12/23/99
Ticker: PLYI
Date Volume High/Ask Low/Bid Close
-------- ---------- ---------- ---------- ----------
09/02/99 1,000 0 0 0
09/07/99 37,000 0.05 0 0 1/16
09/08/99 30,000 0 0 0
09/15/99 2,000 0 0 0
09/24/99 915,900 0 0 0
09/27/99 915,900 0 0 0
09/28/99 915,900 0 0 0
09/29/99 915,900 0 0 0
09/30/99 915,900 0 0 0
10/01/99 8,000 0 0 0
10/07/99 100 0 0 0
10/08/99 100 0 0 0
10/11/99 1,500 0 0 0
10/13/99 200 0 0 0
10/27/99 25,000 0 0.02 0.02
10/28/99 11,000 0 0 0
10/29/99 25,000 0.02 0 0.02
11/08/99 2,700 0.02 0 0
11/23/99 15,000 0.02 0 0.02
11/30/99 23,600 0.02 0.02 0.02
12/07/99 7,000 0.02 0 0
12/09/99 2,200 0 0 0
12/13/99 4,700 0 0 0
12/16/99 5,300 0 0 0
12/17/99 1,767 0 0 0
12/20/99 2,000 0 0 0
12/21/99 50,700 0 0 0
12/22/99 262,000 0 1/16 0 0.02
12/23/99 633,300 0.09 0.04 0.04
What is most peculiar about these two stocks being promoted together
is this:
SDVR:
09/24/99 914,900 0.01 0 0.01
09/27/99 10,800 0.01 0.01 0.01
09/28/99 927,900 0.01 0.01 0.01
09/29/99 927,900 0.01 0.01 0.01
09/30/99 927,900 0.01 0.01 0.01
10/01/99 927,900 0.01 0.01 0.01
PLYI:
09/24/99 915,900 0 0 0
09/27/99 915,900 0 0 0
09/28/99 915,900 0 0 0
09/29/99 915,900 0 0 0
09/30/99 915,900 0 0 0
These appear to be payments of sort. . .perhaps from the companies
to stock professional stock promoters. Remember that many pump and
dumps occur with the companies having no knowledge of such. A group
will simply buy up stocks cheaply over a period of time, then pump
them through newsletters, etc. so they can dump them at a higher
price.
Remember, all pump and dump violates U.S. SEC regulations. Also, the
particular email that was sent me had no disclosure of having been
compensated for the promotion. If the sender had received any
compensation for sending out such a mailing, then this is another
securities violation.
When you come across such blatant violations as these, be sure to
turn them in to the SEC as soon as possible. By doing so, they can
track the activities from the beginning of the scam, which is far
easier than trying to sort things out afterwards.
Safe trading out there. . . be wise and be alert. . but don't ever be
the sucker!
Rande Is
.
.
I hold no position in any of the companies discussed in this post. I
am specifically not suggesting that these two companies are involved
in any way in any sort of scam. I am merely using what is presented
as a form of education to unwary investors. I mean no harm to either
the SDVR or PLYI companies and give no opinion as to the worthiness of
an investment in either company. |
