Hello FPSA members and a warm welcome to our new subscribers,
We've found another stock priced around a dollar that is seeing some suspicious activity: Potash America (PTAM), priced at $0.98.
For those of you who are unfamiliar with the term "suspcious activity" we use it to refer to stocks that are or recently have experienced one or more of the following:
when a stock starts trading out of nowhere (meaning that there is no chart history and all the sudden, BAM volume starts trading).
Large block trades (when the size of the trade is equal to a decent amount of money, say $30,000-$100,000) - this can signal 1 individual possibly "in the know" buying a large amount of stock (why would someone put so much into a penny stock?)
S.E.C. filings that link management, shareholders, accountants, attorney's, etc... to prior known stock promotions
Stocks that are up big or down big on no news
Market makers like WDCO/BMAS/BMIC/VERT who we typically see on level 2's of stocks that are being or end up being promoted
Well the first bullet point on our list is especially relative for PTAM. Shares of PTAM started trading, seemingly out of nowhere, last Wednesday right around $0.90. The stock then saw consistent volume to close out the week, marking the first time in PTAM's history that it has ever traded at least 200,000 shares 3 days in a row.
There are a number of factors that we find especially appealing for PTAM. First and foremost, is the risk/reward factor. PTAM just started trading and is only about 9% higher than where the first day of significant volume traded. This means that we can buy into PTAM and our stop loss is very close.
Why is our stop loss very close? Because if stocks that are seeing suspicious activity do end up going on to see big moves higher, there is no reason they should go below where all the most recent volume started trading at. For PTAM we're very close to that range which is ideal.
So we've identified our risk as roughly 9%, meanwhile if PTAM follows the trend of some other recent dollar stocks we spotted early due to suspicious activity (think LUXR & STVF), we could see shares rise an additional 50%+ from here. So that's the risk/reward factor.
Secondly, as veteran members of website know, we are always interested in the underlying "story" of the stock, and PTAM has a great one. PTAM is in the rare earth (RE) mineral sector. PTAM recently announced that they have a mine potentially full of Calcium Montmorillonite, a RE used in the fertilizer, medical, nutraceutical and cosmetics industries.
Rare earth mining stocks like MCP have been very trendy among big board investors and traders so why wouldn't a rare earth penny stock be very trendy with penny stock investors and traders? We think they will and already are, judging by the recent volume surge in PTAM.
The reason a company's story is very important is because the right one can attract big budget promotions. That brings us to our final point - the disclaimer in this write-up shows that there is a total promotion budget of $950,000 for PTAM. That's a pretty big budget and probably means many websites like ours are likely going to be alerting their members to PTAM in the coming days/weeks.
Make sure PTAM is on your radar and remember that budgets this big usually don't get spent all at once so PTAM should be in play for a couple of weeks at least we would think. If the chart holds up (remember key support is around $0.90) we would not be surprised to see PTAM move above a buck. After $1 is broken, a move towards $1.25 and then $1.50 is not out of the question at all.
You can view a chart of PTAM here and visit the company's websitehere. To catch up on PTAM's recent news, click here.
Sincerely,
Your FPSA Team
