What You Can Learn From a Penny Stock Promoter’s Arrest: Key Takeaways
- Promoters create predictable patterns but it’s KEY to understand how a pump works.
- One top promoter getting arrested is like taking a single snake from a pit of vipers…
- PLUS: charts of recent pumps ALPP, SPOM, HMBL, and ENZC. Burn this pattern into your brain…
On October 26, penny stock promoter Alex Delarge (real name Steven Gallagher) was arrested for allegedly operating a pump-and-dump scheme. His Twitter account was deleted the same day.
The case on this penny stock promoter arrested today is CRAZY, wait for my detailed video lesson tomorrow for https://t.co/fljCJN8USq students only. ANYONE long his pumps like $ALPP $SPOM $HMBL $ENZC must see & its interesting to see similar tactics used on $DATS $CEI $LTNC $GGII pic.twitter.com/srntuj6aEZ
— Timothy Sykes (@timothysykes) October 26, 2021
The U.S. Department of Justice press release says he “allegedly operated a social media pump-and-dump scheme on Twitter to defraud retail investors, earning over $1 million in illegal proceeds.”
He’s charged with securities fraud, wire fraud, and market manipulation. So what does this mean for me and my students? (You count as a student. Study hard.)
The reason I want you to learn about promoters is because there’s a lot of it going on. There’s sketchy stuff happening on WeBull, Twitter, StockTwits, Discord, and Reddit.
Table of Contents
- 1 7 Lessons From a Penny Stock Promoter’s Arrest
- 1.1 All Promoters Use the Same Tactics
- 1.2 Ride the Pump, NEVER Believe It
- 1.3 Hold & Hopers Still Believe (Sadly)
- 1.4 Promoters Push a False Narrative
- 1.5 Promoters Paint the Tape
- 1.6 Promoters Work Together
- 1.7 Expect the Worst Out of Everybody
- 2 Fighting Promoters for Years
- 3 Trading Challenge
7 Lessons From a Penny Stock Promoter’s Arrest
First, here’s another quick take…
Soooooo many questions, watch https://t.co/WgnOv0M0g0 my new video lesson about this latest promoter getting arrested & ask me questions in my weekly https://t.co/occ8wKmlgm webinar today 4-6pm…stay safe & cynical, it’s GOOD to expect the worst out of everyone & on every trade! pic.twitter.com/MJylJRA5pd
— Timothy Sykes (@timothysykes) October 27, 2021
Here are seven quick lessons from Alex Delarge’s arrest…
All Promoters Use the Same Tactics
Most don’t use their real names. They buy shares ahead of time. Then they use boiler room tactics on social media to pump up stocks artificially. Then they sell into the strength/volume their promotion creates.
They also don’t share their trades. They show screenshots of their position size and say “This one is going to the moon.” Or … “Buy all the dips and HOLD.”
Ride the Pump, NEVER Believe It
It’s the same pattern. Alex promoted a lot of stocks over the last 18 months. Here are four of the stocks I tweeted about…
Alpine 4 Holdings Inc. (NASDAQ: ALPP)
ALPP was actively promoted and that created an artificial price rise. That’s a pump! Do I think it’s a scam company? Or is the company fake?
I don’t know and I don’t care. When promoters artificially pump up a stock … it’s a pump.
SPO Global Inc. (OTCPK: SPOM)
I got into a Twitter battle with Alex over SPOM…
Alex was pumping and claimed I was short selling ALPP. Promoters lie to their followers as they pump the stocks. I haven’t shorted anything in almost two years because I prioritize teaching. I buy breakouts and panics.
Hold & Hopers Still Believe (Sadly)
I get messages from people saying, “Come on, Sykes, we’re coming back. This company is legit.” I hope you do. But it’s very sad to get messages from people who get screwed over and preyed upon by promoters like Alex. This chart is one of the best examples…
HUMBL Inc. (OTCPK: HMBL)
Every day I get messages from people who don’t realize these stocks are promotions. HMBL is down 91% from its February high.
Enzolytics Inc. (OTCPK: ENZC)
ENZC is the same penny stock pump pattern…
Do you see the pattern? It’s not an exact science. But all these pumps follow my 7-step pennystocking framework.
Promoters Push a False Narrative
They try to twist what’s happening with big companies and make it work for junk companies. A good example is meme stocks…
GameStop Corporation (NYSE: GME) and AMC Entertainment Holdings Inc. (NYSE: AMC) are BIG companies. And those short squeezes were fantastic. But they had multi-billion dollar hedge funds on the wrong side of the trade.
Nobody is shorting stocks priced as low as SPOM. It’s too risky and too expensive.
Promoters Paint the Tape
One of the charges against Alex is market manipulation. The press release calls it “marking the close.” I call it painting the tape. The basic idea is that he bought higher than the ask to drive the price up going into the close.
Promoters do this and then tell their followers, “It’s going up because it’s a quality company.”
None of these companies are quality — not enough to run 200%, 300%, or even 500% in a day. They all crash. I have thousands of similar charts.
Again, I’m not saying these companies are doing anything illegal And I’m not saying they’re fake. But they are pumped-up penny stocks.
Promoters Work Together
There are a lot of chat rooms where all the members trade together to increase volume. And the promoters work together, too. They have their own little groups where they plan the pumps.
I once got added to a Skype group and lasted about 15–20 seconds. It was like pulling back a curtain. Suddenly, all the penny stock conspiracy theories made sense. I don’t know who added me and I don’t know any of the people I saw there. But for 15 seconds I saw right into the viper’s nest.
Expect the Worst Out of Everybody
Now you know why so many people hate penny stocks. It’s a niche full of shady characters, fakes, and frauds.
So how do my top students and I trade penny stocks? We understand what happens when promoters pump. We understand what happens when the promotion ends. And, we expect the worst out of every company, every trade, and every unethical promoter.
None of this is new. I’ve been around for 20 years and seen so many pipe dreams. One reason I got into teaching is to educate people about how it works.
That’s why I’ve been…
Fighting Promoters for Years
Read this Men’s Journal article…
And watch this video…
How to Pick a Trade: Best Practices for New Traders
Pay attention as I go over top rules and how I followed the pipe dreams and lost $500,000 on one trade. And remember, promoters push a false narrative…
I’ve only scratched the surface in this post. But I’ve dedicated my life to helping new traders learn. Ready to do this? Start here…
All my top students came through the Trading Challenge. No ifs, ands, or buts. If you want video lessons, 2-4 weekly webinars, watchlists, and a chat room where pumping is NOT allowed…
What do you think of Alex Delarge getting arrested and charged? Comment below with “I will learn to be self-sufficient.” I love to hear from all my readers!