Aurinia Pharmaceuticals Inc (AUPH)

[nsomniyak]

Sounds like a case of the "post hoc fallacy" to me.

In essence, the "post hoc fallacy" is the error people make when they say that A *CAUSED* B when in fact all that is true is that B happened *AFTER* A.

In many of these cases, there is a strong correlation between A and B but both A and B are due to something else (a deeper cause).

In this case A is Clay's video on a stock and B is a subsequent decline in the stock. The fact that the video came first doesn't mean that the video caused or triggered the decline.

My guess is that the deeper cause for both A and B is an overextended stock - characterized by a fast run up, maybe an overcooked RSI, and a big increase in message board posts. (Not only does the post volume correlate with stocks on the move, it also correlates with the size of the audience for Clay's prospective chart - he is, after all , trying to sell his charting service).

Stocks that fit that profile are ripe for a pullback, regardless of the underlying fundamentals and regardless of whether someone posts a chart on them.

I am betting Clay's screens filter for those and/or similar indicators. That ends up yielding a strong correlation between A and B but there is no causal effect.