Fibonacci Numbers are commonly used in Technical Analysis with or without a knowledge of Elliot Wave Analysis to determine potential support, resistance, and price objectives.
The most popular FibonacciRetracements are 61.8% and 38.2%
61.8% retracements imply a new trend is establishing itself.
38.2% retracements usually imply that the prior trend will continue
38.2% retracements are considered natural retracements in a healthy trend.
Fibonacci Retracements can be applied after a decline to forecast the length of a counter-trend bounce.
The 50% retracement is not based on a Fibonacci number. Instead, this number stems from Dow Theory's assertion that the Averages often retrace half their prior move.
There are literally thousands of penny stocks that are publicly traded. It isn’t uncommon for some of those stocks to get abandoned by their control people for a variety of different reasons. When a publicly traded company gets abandoned it doesn’t just stop publicly trading. The abandoned shell will continue to trade until the day that the SEC files an administrative order to revoke the Issuers registration (for SEC filers) or until FINRA deletes the symbol (for non-SEC filers). That can often mean years of trading as nothing but a zombie ticker.
As abandoned shells, the public Issuers will fall behind with their business license at the state level (since nobody is around to pay the annual fees due to the Secretary of State). When two years pass without an entity paying its business taxes at the state level, the entity becomes revoked. This opens the door for control of the public Issuer to be taken over by an interested party (a shareholder or debt holder for example) through a custodianship petition.
The interested party can file a petition with the local court requesting that the court approve a motion to let the interested party (or an individual of their choosing) take over control of the abandoned shell “in the best interest of the shareholders“. The only real concerns the court will have is that there is no objections to the motion and that the custodian has a clean background. The petitioner has to prove to the court that they have made a legitimate effort to contact the former control people and they have to convince the court that the custodian is a respectable choice with a clean background that will act in the best interest of the existing shareholders. That usually isn’t hard to do so most custodianship petitions will be granted by the court.
The only exception is usually when the old control people do show back up to object or if the petitioner voluntarily dismisses the petition (this may happen if the SEC suspends the Issuer during the proceedings or initiates an administrative order to revoke trading in the Issuer during the proceedings).
The SEC frowns down on the taking over of abandoned shells considering abandoned shells to be “ripe for fraud” because after they are taken over they often get used for pump & dump schemes and other sorts of illegal activities. Back in 2012, the SEC initiated a program called “Shell Expel” to try to combat the problem. Through the Shell Expel program the SEC suspended trading in over 568 abandoned shells between 2012 – 2015. The program went cold though in 2015, and since that time custodianship filings have been on the rise. Just the past month alone there has been over 2 dozen new custodianship petitions filed.
It is important to Note here that there is a “legal” way to take control of an abandoned Issuer and there is a “fraudulent” way. The “Legal” way is by filing a Custodianship petition with the court to get court approval to become the custodian of the Issuer.
The “Fraudulent” way is pretty much any other way people use to take over control of an abandoned shell.
This could include:
• Making fraudulent filings with the local Secretary of State to reinstate the entity and add your name or the name of others as new officers of the Issuer (without authorization)
• Making a new entity by the same name in the same State or a different State then filing fraudulent/forged documents with the Transfer Agent showing that you were transferred/sold control of the Issuer (I recently exposed a group from New York that was doing this)
• Making fraudulent filings with the SEC saying you acquired control of the shell [I recently exposed a group out of Canada (Richard Tang) and Minnesota (Mark Miller) that was doing this]
The SEC has filed several Complaints against individuals for fraudulent hijackings in the past including David Stocker and Jason Wong (among others).
Recently we have even seen groups using other types of fraud on abandoned shells like hijacking their old domains to create fake websites and/or put out fake press releases often supported with fake twitter pages. I built a whole IHUB forum to expose the groups involved in this type of fraudulent activity. I expect SEC action against some people involved in the not too distant future.
The Custodianship Process can take several months to complete.
Once a custodianship petition is filed with the court, the court will set a date for a custodianship hearing to take place approximately 4- 6 weeks in the future. This allows time for the former control people to be served at the last available contact information provided by the Issuer.
If no object is made to the custodianship petition, the court will almost always approve the petition at the custodianship hearing. This officially puts the custodian in control of the shell.
After that, the Court process mainly just involves status reports then eventually if the court is satisfied with the how things are going under control of the custodian, a motion is made to discharge the custodian officially completing the process.
What Happens to The Shells after Custodianships are Granted
The job of the custodian in the view of the court is to put the interest of all the existing shareholders first, but that almost never ends up being the case. Just about 100% of the time, the custodian is taking control of the abandoned shell for their own interests and not that of the existing shareholders. In some cases the custodian will even do a reverse split wiping out the former shareholders.
The custodian is usually looking to sell/peddle the shell for a profit. Shells can sell for any where from $20,000 – $100,000 or more while the cost of hijacking the shell usually ends up being less than $10,000.
The custodian will often take the money they spent gaining control of the shell and bill the shareholders by putting the debt on the balance sheet as a convertible debt Note. Those Debt notes can then end up turning into ugly share selling schemes like the one described in a report we recently published for Befut Global Inc (BFTI).
Even without using bogus debt to create share selling scams, the shells can turn into some kind of scam like the CYPE, WSML, and AXMP (Milost Global/Palewater Advisory scams) that I exposed. CYPE, WSML, and AXMP all ended up being suspended by the SEC.
More often than not, though, the stocks won’t get suspended and some can turn into monster plays making hundred percent or even thousand percent gains.
Stocks that end up being taken over through custodianship petitions can offer several profit opportunities for penny stock traders for a number of reasons:
1. The share prices have often fallen on light volume to relatively low prices (for the share structure of the stock) due to years of inactivity putting some of the stocks in extremely good price ranges and setting them up with the potential for large gains if interest builds for the stock.
2. Most have seen very little trading activity for many years so much of the float is owned by non-active traders that may not even realize the stock has become active again …. this means the retail/active float is often even smaller than the true float.
3. Custodianship stocks are automatically considered reverse merger candidates. As reverse merger plays that allows for the type of speculation that can create big message board/social media pumps
When is the best time to trade custodianship plays?
The best profit opportunities often come in stages usually stretching over several months:
1. When the custodianship petition is filed with the courts. This can often be the biggest short term profit opportunity for custodianship plays. Custodianship petitions have been done in several states in the past:
Nevada, Florida, Colorado, Wisconsin, Utah, California, Texas, and North Carolina, but over the past couple of years the overwhelming majority of custodianships have taken place in Nevada which is great since Nevada has a court website that offers the public access to all their court filings as they are docketed. We scan the Nevada court site at least a couple times a day for new custodianship petitions so we can get that information to our members ahead of the pack.
2. When a custodianship petition is granted it can often lead to some short term interest in the stock – both leading up to the court date for the custodianship hearing and after the custodianship is officially granted. As mentioned earlier, the custodianship hearing is usually scheduled for 4 – 6 weeks after the petition is filed with the court. We track all the upcoming court dates for our members so they don’t miss any profit opportunities.
3. When the entity is reinstated at the Nevada SOS it can often lead to some short term interest in the stock. Some custodians will reinstate the entity right after the custodianship petition is granted. Others will wait until they have found a buyer for the shell before they reinstate the entity. We track all Nevada SOS filings in real time so we can catch reinstatement filings as soon as they hit so that our members won’t miss any profit opportunities.
4. When the custodian is discharged by the courts (meaning the court has become satisfied with the arrangement basically completing the custodianship process) it often lead to some short term interest in the the stock – both leading up to the court date for the discharge hearing and after the discharge is officially granted. This usually happens a few weeks up to a few months after the custodianship is granted. Some custodians put their shells up for sale before completing the process so things move fast after the discharge … others wait until after completing the custodianship process to put their shells up for sale. We track all the upcoming court dates for our members so they don’t miss any profit opportunities.
5. When the shell is sold. This is usually the other catalyst that creates the biggest moves (besides the custodianship petition being filed). This is the stage that set off the big LCTZ move. Once it is known that new owners are taking over control of the shell it becomes a full blown reverse merger play supported by all kinds of yummy speculation that message board and social media pumpers just eat up. This stage usually will not happen until several months (or longer) after stage 1 (the the filing custodianship petition).
Knowing that the stock can have several stages of price movements, different traders will approach a custodianship play with different trading plans. Some will try to profit off as many of the stages as possible while others will buy early and take some profits along the way but still treat the trade as a long term play holding shares for that big reverse merger at the end. The key as with any trade is buying ahead of the pack which means catching the catalyst as early as possible. That is our focus for our members.
Not all custodianship stocks will turn into good custodianship plays. So which are the best?
• Stocks that are in lower price ranges (typical under $.01/share or in the low pennies) with relatively good share structures for the price have the biggest potential to turn into big plays so they usually draw the most interest.
• Interest can also depend on who the custodian is for the shell. Some custodians are more popular than others. The custodians that were involved in big movers in the past tend to get more attention when they do new custodianships.
There are literally thousands of penny stocks that are publicly traded.
It isn’t uncommon for some of those stocks to get abandoned by their control people for a variety of different reasons.
When a publicly traded company gets abandoned it doesn’t just stop publicly trading.
The abandoned shell will continue to trade until the day that the SEC files an administrative order to revoke the Issuers registration (for SEC filers) or until FINRA deletes the symbol (for non-SEC filers).
That can often mean years of trading as nothing but a zombie ticker.
As abandoned shells, the public Issuers will fall behind with their business license at the state level (since nobody is around to pay the annual fees due to the Secretary of State).
When two years pass without an entity paying its business taxes at the state level, the entity becomes revoked.
This opens the door for control of the public Issuer to be taken over by an interested party (a shareholder or debt holder for example) through a custodianship petition.
The interested party can file a petition with the local court requesting that the court approve a motion to let the interested party (or an individual of their choosing) take over control of the abandoned shell “in the best interest of the shareholders“.
The only real concerns the court will have is that there is no objections to the motion and that the custodian has a clean background.
The petitioner has to prove to the court that they have made a legitimate effort to contact the former control people and they have to convince the court that the custodian is a respectable choice with a clean background that will act in the best interest of the existing shareholders.
That usually isn’t hard to do so most custodianship petitions will be granted by the court.
The only exception is usually when the old control people do show back up to object or if the petitioner voluntarily dismisses the petition (this may happen if the SEC suspends the Issuer during the proceedings or initiates an administrative order to revoke trading in the Issuer during the proceedings).
Stocks that end up being taken over through custodianship petitions can offer several profit opportunities for penny stock traders for a number of reasons:
1. The share prices have often fallen on light volume to relatively low prices (for the share structure of the stock) due to years of inactivity putting some of the stocks in extremely good price ranges and setting them up with the potential for large gains if interest builds for the stock.
2. Most have seen very little trading activity for many years so much of the float is owned by non-active traders that may not even realize the stock has become active again …. this means the retail/active float is often even smaller than the true float.
3. Custodianship stocks are automatically considered reverse merger candidates. As reverse merger plays that allows for the type of speculation that can create big message board/social media pumps
Not all custodianship stocks will turn into good custodianship plays. So which are the best?
• Stocks that are in lower price ranges (typical under $.01/share or in the low pennies) with relatively good share structures for the price have the biggest potential to turn into big plays so they usually draw the most interest.
• Interest can also depend on who the custodian is for the shell. Some custodians are more popular than others. The custodians that were involved in big movers in the past tend to get more attention when they do new custodianships.
* You will never go broke, taking a profit * Preserve and enhance your investment at the same time !
* Sell enough shares to cover your initial invested amount, - let the rest of the shares sit in your account, - with the chance that they'll climb higher.