Just posted a PM reply and though it time to repeat myself at the board again.
So here's the story of why you see pump & dumps, again.
From under my tin foil hat;
Sub & micro penny stocks are watch stocks because they are going after funding and have talked about it in public. It doesn't matter what PINKS say, it's all crap. What causes OTC stocks to run is VCs and the stock they get for funding. Not the LONG & STRONG board posters, that like the sector or love the story fit !!! Just because the price of oil gets high doesn't mean some one man self called oil company with a lease to and old well property is going to make you rich!! Believe me, I've been threw a half dozen of them. And while I made some money, not one is still around.
The game is insiders start the story and create a small pop for retail attention, VCs get stock cheap for funding, then buy runs cheap, to sell it in.
The company insiders part in the OTC game is to manipulate an emotion pop in price before funding, to prove to VCs it can be manipulated easily. If this doesn't work the first time, they need to increase the story line. Talk about a free share dividend, uplisting, restructuring, something which gets excitement going. Talking about new partnerships, new products, or future plans, hasn't done the job.
Usually the company has a VC on the line or the other way around, by this time. You see Venture Capital isn't giving funding to a start up because they expect them to be successful. They do it to get a major share position, that they can sell for an instant ROI. The actual loan deal, with interest, is rarely ever paid back. But if any is, the VCs consider that cream. They make their profit from selling their stock, not the loan interest.
We want to do what the big guys do. Buy cheap when you see accumulation with little price change, wait for their manipulated bought run and sell along with them. Ps; that accumulation is the insiders & friends loading up when funding is closed. They want to do what the big guys do also.
The retail herd, which most pennylanders below to, are the story believers, the ones posting about every detail possible with the story line. They need news to produce excitement. They alone don't have the will or knowledge needed to start and continue a run. The VCs have the cash and stock needed to do that.
Getting the herd worked up, waiting for some promised event to happen, is needed only so they think someone else knows something they don't, when the VC starts buying up the ask one day.
That gets the run started and excited emotion does the rest!
Every so often continuation may need some new buying or PR news. But normally a parabolic run can last 3 to 5 days without help. If the volume isn't large enough for the insiders, VCs and us educated traders, to sell our share in that time, then some new manipulated buying or news may be required for a longer continuation.
If there is a stall or small retrace, also involved, without an exhaustion high candle spike. That's how to know if there is more to come.
It's that simple.
VCs spend a couple thousand and make tens of thousands selling into the run they created. The herd follows the trail boss to the slaughter house.
When the VCs sold all the shares they got from the company for funding, the run stops. Greedy retail won't sell in a run and the VCs, which created the run, have no shares left to sell. The exhaustion candle spike is seen, the next day no one can buy higher and the day ends up red. The retrace follows and the trade is over!
All this is similar to the 3 step 3 month temp job pattern, but that one continues after the 1st VC is gone, because the company wants to succeed, but needs to get funding in trenches, to actually execute a business plan.
The pump & dumpers never planned to execute the story in the first place. This is where reading filings and understanding what's hype and what's not, come in handy. It's rare to find a PINK with a temp job pattern. Normally they come from the OTC listed bunch of companies.
A complete story line must be worked out and on the desk, for timed PR releases. Their game is more complicated and can involve multiple VCs. There may be loans, warrants, and share offerings involved. And usually there is a degree of successful completion of promised goals. They just can't become successful in 3 months. So retail gives up. The herd needs new grass constantly. But growth takes time.
If you have good management in one of these, you'll see an over all 3 step run, and retrace to 50% FIBs and a channel form. These guys planned ahead and execute just enough to keep the company & stock going, on the funds they raised from the VCs.
If it retraces below 61% FIBs it will walk down for 6 to 9 months, when you may see another attempt.
TA DA ! This post is over. It all started because of MMTE. Some time I'll have to explain why (IMO from under my tin foil hat) that one was all insiders to date. And how treasury shares or CEO owned stock can fund a company, on the OTC.
