That's actually a great question, and one that anyone involved in penny stocks or microcaps needs to understand to do well as an investor, or you get left holding the bag on what seems to be good news.
With penny and junior mining stocks, the biggest risk is Liquidity. I.e. not having enough volume to sell a position. This is not a problem with, say, Barrick Gold, where you can buy/sell your whole position (unless you have millions of dollars in your portfolio) at the bid or ask without hardly moving the price. So stocks like SDVI, which I'd say has an average daily volume of less then $10,000 per day (some days it's practically nil), it's very hard to get in or out of with $50,000+ stakes.
The key is when news comes out, volume rises (temporarily, and generally speaking of course). This provides an opportunity commonly referred to by a few of my peers as a 'liquidation event' (like when we were on our 1 month PR binge and hitting the .0025-27's, oh baby!). As a result, news allows people to sell who have been accumulating at low volumes for long periods of time, and sometimes that selling pressure is significant enough to make the stocks actually decrease (see VMS ventures in 2008 period, where every new drill hit of greater and greater results caused a one day spike of 6-10 cents followed by a next day drop to below the original price).
That's the opinion I've heard several times (and subscribe to myself); news causes liquidity, and low liquidity stocks suffer as a result of the pent up selling pressure. For example, if I wanted to dump 30 million shares of SDVI (say I just get fedup with it all and tired of waiting), I'd probably have to kill it down to triple 0's to get rid of them all, costing me even more profit (or wait at .0022 for many months indeed, with commission charges all throughout). So I'd wait patiently while the stock is at .0022 for a few months and when news comes out, good but expected news, I'd dump all 30m between .0025 and .0019 (and because of the news, people would be watching and paying all the way). That's a liquidity event. :)
Note: I'm not actually intending to do that (at least not for a measly .0025!).
Cheers,
Post-Exam Saredi, biding his time for the Jets to take the cup next year...
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