Two weeks ago I posted how I was waiting for a new hot stock promotion to trade since what I refer to as “pump season” was about to begin. This pump was released last Friday, 08-28-2012, but I have been away on vacation in Maui Hawaii, so I was not able to make a blog post. Unfortunately, I was flying to Maui on September 28th so I was wasn’t able to trade this stock but I am not watching my system to trigger a potential trade setup.
As expected the pumper’s alert was successful right from the beginning however the second day of the promotion resulted in a sharp pullback. Fortunately, this was completely expected since stocks seldom move up over 50% in one day without a significant retracement and when penny stocks get near 100% gain they almost always pull back. The reason this occurs is that suckers that were late to buy usually chase the stocks and the market always needs to punish these people and take their money before a stock can continue to move higher. SANP was their pick and the stock made an 89% gain on day 1.
This pumper was the same one that promoted LEXG, RAYS, and SEFE over the last 2 years so I was sure the promotion would be successful at least on day one. This pumper typically releases alerts on stocks that trade in the $.80-1.00 range and they normally trade up to the $2.50-3.50 range, however, their first alert LEXG was extremely successful and resulted in the stock moving up from $.10 to 10.00 in a couple of months.
The pumpers decided to release there alert at 11:20 A.M. EST which is different from there previous alerts which were released in the afternoon around 3:00 P.M EST. This may have been the way the stock made such a large move on the first day, unlike RAYS and SAFE which had smaller first-day gains and therefore allowed the stock to move more before the first major pullback.
I attached a 15-minute chart of the 6 days that this stock has been trading. (since was a new issue, but not an IPO, probably just a ticker change into a shell.) I expect $1.65 to be an important price for this stock to trade and close above. If this occurs this stock should make a move to $2.20-2.30 fairly easily since this pumper will probably try to keep this pump going for as long as possible before short-sellers like Timothy Sykes attack it. There’s a good chance the stock could pull back again around 1.60-1.65 as well. I will be watching for possible entry and eventually will look to short it if the shares are available.