More on the Pond Fishing Play ! The OTC game and VC funding deals. A keeper post.
IT's not a pond fishing play. It does not meet the requirements, other then having 3 volume spikes at bottom.
You have to understand the Psychology of the play.
For a pond fishing play to setup; the company & stock should be dead, traveling along the bottom! Or often dead in volume but high in price and pulled down big, to the bottom, with no increase in volume.
Retail interest is the key. The darkside is going to create something from nothing! There should be no one interested before they start.
That way they can control price & volumes within their small circle of friends. And retail will not get in the way. When they are ready and want retail, they will get their attention. But until then, they want to suffle stock between themselves.
OK
You have a shell which has no retail action. The stock owners are mostly insiders. Company management can pick any price they want for their stock. All they need to do is buy & sell shares to each other and run or pull down the price. Plus they determine their original stock value by saying so and having the transferr agent report it to the market maker.
Thats how you see stock with no one trading, move from 2 cents or 20 cents to .0002 or .002 so quick. If the stock is already there find! You see VC funders don't usually give loans for millions $, but normally only hundreds of thousands.
Run the numbers $500k loan with the price at .02. Would give them 25 million shares common as their loan backing gift. And if the company had an average OTC OS in the 900 million to 1 billion range, that would not be very much power!
So you will see stock prices in the .002 or .0002 area, depending on the OS. Now a $500k loan at .002 will see 250 million shares, in their hands. With an ave OS of 900 mil to 1 bil. Thats some power, 25% of the OS.
So now you see why the price has to be low. And why it's taken down low from out of the blue. (The first signal something is in the works!! A funding deal !!!) If it's already there, so much the better. The insiders don't need to wash trade the price down.
{wash trade} selling stock back a forth, each taking a turn getting gains and the next time the other gets the gains, until both are even and the price is where wanted.
So now we have the price in an area VCs can loan & get a large enough amounts of stock to have power! All the time this is going on the insider should be trying to accumulate their own stock. They know something is about to happen which will produce large gains, in the near future.
This is why you look for accumulation. Strong buying or selling at the same price level, for an extended time. A month or two. If volumes are low, it takes a long time to get alot of stock.
Also remember either strong buy pressure or sell pressure means the same thing, when price does not vary. There is NO difference in buying at the ask or buying at the bid, when the price only varies .0001.
This is where the 3 volume spikes come it. As the funding deal closes, shares are issued and reported on the exchanges. Either from tresuary or insider held stock.
The last signal a deal has been completed. 1st small fishing line in the pond.
OK price is low, insiders have accumulated, VCs get their stock. Next "they want retail interest" You see the PRICE & VOLUME wash trade spikes !! The get attention signal the game is about to begin!
ALL tin foil hat guessing & speculation on the workings of a pump & dump!
Signals to watch for. Dead stock or pulled down stock, with long term accumulation. A story line about some kind of restructuring (company shell shift merger/ new business direction OR share restructuring or funding soon) Next watch for a double and PR story blitz during a run. Usually strong PRs are held on the desk, until needed, at stall or retrace points in the price movement.
Thats another thing needed for darkside success. They need to plan out the story, to generate retail herd follow thru. If it's a scam, many times the story is just (Smoke & mirrows PRs), basically lies that can be proven. But if a Temp Job is wanted and the company is really trying to grow the business, with the funding. A story line and release execution cycle, must be planned! Along with plan B's, if interest can't be maintained over 3 months. This is where you see the dividend from one shell to another, other shell acquisition news, new new funding possibilities and the like. The fluff is repeated news about a talked about goal, huge market size & possible penetration numbers, CEO Updates & progress reports, letters of intent, and the like.
The OTC game. Sacm outfits or honest growth companies, the game is the same. Managemnt MUST get in bed with the VCs to raise cash and create power! Scams turn into 1 month pump & dumps. Liget companies turn into 3 step 3 month Temp Jobs.
