While doing some initial investigation into how the Day Trading Robot stock trading system works I stumbled on a web page on the Day Trading Robot Site that perfectly demonstrates how and why pump and dumps work. I need to say now that I have nothing against pump and dumps, people like me that know how to recognize and play them both on the buy and short side can make a bundle.
The key is recognizing a pump and dump and not get caught up in the hype.
1.) Penny Stocks do not represent real companies. They exist for one reason, to make people money on the increase of share prices. The transfer of wealth from the dumb to the smart. (Of course, a few Penny Stocks are real companies, but finding them is next to impossible and you will be wasting time that could be better spent on fake companies.)
2.) Great news can be a powerful mover of penny stocks but other than temporarily increasing the price of the stock’s shares it means nothing.
3.) Newsletter tips are just that – tips. Study the newsletters to see who gets the best bounce from their picks but never believe what they tell you.
This is how it generally works: Newsletter or newsletters decide to promote a stock. Many times they work for the Penny Stock “company” and get free shares or buy cheap shares for their services before the promotion starts. They release their newsletters promoting the stock, the penny stock company then will release some “great” news to coincide with the newsletter pump. The stock doubles or more, the newsletter folks and insiders involved with the companies sell shares into the buying spree. After an hour, day, or week the stock returns back to its original price or lower.
4.) Any good news about a penny stock should be considered a LIE.
5.) Never fall in love with a penny stock, it’s like falling in love with your blow up doll.
Ok, back to the Day Trading Robot Pump and Dump from last May. Some would call it the day trading robot scam, I think it is just good work as the guy made $50K from the company he was promoting got a bunch of shares cheap or free and sold them into his pump created buy his subscribers. As Banyan from Seinfeld would say: “That’s gold Jerry, GOLD!” –
Jason Kelly (the day trading robot) is a genius, you just need to tap into his picks with the cold blooded detachment of a serial killer.
Ok, back in April The Day Trading Robot (I am sure there is no actual robot) started promoting a company to his followers saying how he was going to dump 100K of his own money into the stock and how great it was and bla bla bla
You can find the full text of the pump he sent to his followers here on this website page of the day trading robot site. Below, I have summerized the important parts:
“And My Greatest Stock Pick of 2009 is…”!a
This will be a short email… Because
the market is about to open.
This week’s stock pick was just last
week a small and rather boring
But last friday, they announced in
a press release the launch of their
new subsidiary “Ad UOMO”.
This new business model is quite
It then goes on to explain why this stock is so great and why you should buy it for several paragraphs and then closes with the following:
I’m so confident in this pick… I’m
about to buy $100,000 worth of
the stock. Right now.
Alongside all of my subscribers,
I’m going to put $100k on the line.
I’ve waited til now to do this,
because then I will have the
ultimate proof… That my picks
Then immediately following this penny stock pump, was the fine print which I am sure most did not bother to read.
Daytradingrobot.com has approximately 160,000 shares remaining and will continue to sell UOMO shares today and tomorrow. These sales may lower the value of YOUR purchase of UOMO shares and could result in significant loss. Daytradingrobot.com will not update its purchases and sales of UOMO in any future postings on Daytradingrobot.com . Daytradingrobot.com is selling and will sell any UOMO shares that I or my affilates may acquire. These sales may lower the value of YOUR purchase of UOMO shares and could result in significant loss………..The price target contained herein was obtained from a Harbinger Research report authored by Brian Connell dated 5-17-2009.
The dates are important here. The PAID promotion started around the end of April, early May. In the disclaimer he states that he will start dumping shares and investors look out. I guess it is good that he at least gives his followers a warning of the dump to come???
The important date is 5/17/2009. I suspect this is when the dump began. Look at the chart action below starting at the 5/17 date:
On the 5/17 – 5 -18 the dump started, the stock hit its peak and then it continues of the rest of the month driving the stock way down. Pump and Dump completed. Seeing that chart almost brings tears to my eyes, as if seeing the Mona Lisa for the first time. It is a beautiful pump and dump.
The perfect way to play this stock was to buy during the pump, and short during the dump. People on the outside need to guess on when the pump is over and the dump has begun, but closely watch the chart and doing your do diligence will get you closer to these points. Not as close as the pump and dumper, but you still can make a bundle. Unfortunately, there will always be the gullible like this person that lose a fortune on these things and should stay away from penny stocks. The sad thing is when you get a big win because you understand the Penny Picker Rules, your money is coming from some other person’s pocket.
There is a ton of money to be made if you stick to my 5 Penny Picker rules above. But if you believe any thing the pumpers say, you will lose big.
More Day Trading Robot Reviews to come.
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