Penny Stock Scam – Update

In a past post I wrote about the very shady market of Penny Stock newsletters and penny stock promotions.

I posted about the featured stock they were promoting in the newsletter where they advertised it should go from the current $0.80 per share price up to $44.28 per share and that you had to act fast to get in this supposed amazing opportunity.

Here is the original post: Penny Stock Newsletter Scams

Other Penny Stock Posts I’ve written:

It is amazing that it is legal somehow to pay a company lots of money to create a hyped up, borderline untrue newsletter and send it out to thousands of potential investors.

You would think that in this day and age of investment regulation that wouldn’t be able to create outlandish claims like these newsletter do but it happens everyday.

Many times by the time you get one of these newsletter in the mail the stock has moved already with lots of volume so that insiders can sell out.

It has been about 10 months since I wrote that post and thought I would post an updated chart of where this stock is now. The highlighted area was where the stock was when the newsletter came out.

As you can see, when the newsletter came out the stock volume poured into the stock and marked the top for that stock.

For the next the 9 months, it went straight down.

The stock was touted as going from $0.80 to $44.28 is now $0.10 a share. Meanwhile the overall stock market went up during that time.

Penny Stock Pump and Dump

Unfortunately, there are hundreds(or thousands) of penny stock newsletters and services that prey on people that are looking at the stock market with a lottery ticket mentality.

These investors believe they can find some “secret” stock that has a revolutionary product that will cause the stock to explode and the newsletter they received is providing them with this opportunity before anyone knows about it.

If you take the time to learn chart reading and stock screening you can take advantage of some of these penny stock moves with the understanding that you aren’t buying into the “Story” of the penny stock but simply trading off of the price action and the supply/demand.

I wrote about Penny Stock screens here (look at the bottom of that post for how to do free screens to find penny stocks that are moving on large volume)

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