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Trading Recap

Did You Catch This Blatant Pump?

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Written by Timothy Sykes
Updated 4/7/2023 7 min read

The term “fake news” is something we hear about a lot…especially as we enter election season.

But if you trade penny stocks like me…then you never stop hearing “fake news.”

You see, most penny stocks are horrible companies with weak fundamentals and slim chances of becoming profitable.

Most analysts refuse to cover them because they’re so bad.

That’s why these companies turn to the “dark side.”

They hire a marketing agency to send out “investor awareness” and marketing emails to help bring attention to their company and stock.

These promoters will try their best to get readers excited to pump the stock price up.

It happened on Thursday in the ticker symbol HCNWF. 

A blatant pump that flew close to the sun and got away with it.

Understanding how pumps work has helped me immensely throughout my trading career. I can’t tell you how much of my +$7.4 million in trading profits were made from penny stock pumps…but I bet a bunch of it.

How The Game Works

Crappy companies need money. To raise the capital, they will do stock offerings. But why would anyone buy their crappy shares if the company sucks?

This is where marketing and promoters enter the picture.

The company will pay the promoter either cash or stock, sometimes both, to write favorable things about it.

These promoters have email lists and chat rooms they can send the marketing material to.

They’ll typically say stuff like the company is disruptive, revolutionary, has developed some breakthrough technology, or how it’s the next Amazon, Apple, or Tesla.

It’s mainly just a bunch of hype.

However, if the promoter does their job correctly…they will have brought a ton of new eyeballs to the stock…creating volatility and opportunities for traders.

I always tell my students never to believe the hype. And that most of the companies involved in pumps suck, and their stock will go to zero.

But if the promotion is successful, the promoted stock will have experienced a surge in price… allowing the company an opportunity to raise capital through a stock sale.

Once shares get diluted, the stock will then dump…

And a few weeks or months later, when the company needs a capital injection…they’ll play the game again.

Why I Love This Game

Promoters and the companies that play this game aren’t that smart. They’re fairly easy to read. And the traders who play these stocks are led by emotions– fear, and greed. After all, most of these stocks have zero fundamentals.

If I’m going to play a poker game…I want to play against players who aren’t as skilled as me and/or are bad.

This is why I rarely trade large-cap blue-chip companies. I would compete against sophisticated players with an information, execution, and capital edge over me.

And that’s why I’ve always stayed in my lane. 

Moreover, the penny pump stock cycle doesn’t change much. It’s been the same for years.

For example, we typically know why the stock is pumped. The company needs money.

But here’s something else that most people forget.

Some promoters get paid in stock.

What would you do if you were given free shares of a crappy stock?

You’d dump your shares right when the market opens and exchange them for cash…

That’s why I like to buy “morning panics.” 

So What Happened in HCNWF?

In just five trading days, HCNWF went from a low of $0.36 to a high of $2.39.

Source: StocksToTrade

That’s a move of more than 600%!

The company was going hard in the pain starting on Mar 31, 2023.

It issued these six press releases:

Source: StocksToTrade

On April 3rd, the company received a request from the Investment Industry Regulatory Organization of Canada and the OTC Markets to comment on its recent stock price surge. The company announced it was unaware of any material, undisclosed information that could have impacted its trading volume and stock price.

However, despite being tapped on the shoulder regarding its stock price…HCNWF continued to pump.

The next day the company came out with another press release:

“Hypercharge to Provide EV Chargers, Including Level 3 DC Fast Charging, to the Kapawe’no First Nation”

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These press releases usually lack specifics. They just want to show that the company is moving in the right direction and trying to make things happen.

As blatant and obvious the pump was…it didn’t stop traders from trying to ride the momentum up.

And the company got exactly what it wanted:

It raised nearly $5 million at $1.05…a considerably lower price than what it was trading after the runup.

But that’s how the game is played.

And now that the company got what it wanted…it’s likely to cool off its promotional activity.

What You Should Be Aware Of:

HCNWF shares halted on Thursday for pending news.

The news was that it raised $5 in a private placement stock offering.

It went from $2.30s down to $1.30s pretty fast.

And that is always a risk when you’re trading promoted stocks.

You never know when the stock will halt and the company will announce a stock offering.

I was warning traders in my chat room about the risk in HCNWF. 

A stock offering creates dilution, which is a major negative for shareholders. And because you don’t know when they’ll be announced, holding shares overnight on a stock that’s been getting pumped is risky.

There are several strategies I teach on how to trade these plays. As I said earlier, many of my 7-figure profits have come from trading penny stocks.

If you are ready to learn more about my program and how I can help, do yourself a favor and click this link. 

P.S. My account is down after the first week of April. To get back on track, I’ll be focused on this strategy. 

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”