Nice post, Peter. I would add that all this talk of T/A is really silly. T/A has some merit for real markets, but most otc stocks, especially promotions like this one are anything but real. If you don't know what I'm talking about, you really need to read an SEC complaint against an otc promoter. This isn't some nebulous naked shorting nonsense. It happens all the time. And it ain't rocket science.
Put yourself in the shoes of a promoter. You'd want to dump as much stock at the highest price possible. To do that, you'd try to create as much buzz about the stock as possible and do whatever you could to give investors the impression that your stock is hot and demand. So here's what you do. You flood the world with mailers, spam and fax blasts. You trade the shares back and forth to give the impression of volume. You relentlessly buy the stock and take out all offers. Once market makers see that the game is on, they'll happily cooperate. You run the stock day after day on larger and larger volume to attract the momentum buyers. Soon, every gullible otc investor can't resist being in on the story. When the frenzy is at its peak--when everyone thinks the stock can only go higher--you let out some shares and take some profits. When the weak hands have been flushed out, you start buying again and the dip buyers come in. You take the stock to new highs. Now everyone is feeling emboldened; everyone loves the story and the T/A looks great. Any dip will be bought aggressively. Now it's time to unload. As the stock sells off, bargain hunters come in, only this time they don't know what they're bargaining for. You sell, sell, and sell some more. You made trading profits on the way up and you dumped all that cheap stock you were given. It's time to move on to the next one. Market makers and shorts make money. Nimble momentum traders escape with their profits. And everyone else is left holding the bag.
That's the way it works, folks.
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