Expect the Worst: What You Can Learn From a Penny Stock Promoter’s Arrest

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 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.

7 Lessons From a Penny Stock Promoter’s Arrest

First, here’s another quick take…

You can watch the video lesson here. If that link takes you to the Profit.ly landing page, then NOW is the time to level up. And if you want to ask questions, apply to join the Trading Challenge.

Here are seven quick lessons from Alex Delarge’s arrest…

All Promoters Use the Same Tactics

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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 a pump. People still message me and ask me to ‘admit it wasn’t a pump’ because the company uplisted to the Nasdaq.

ALPP chart
ALPP chart: 1-year, promoted penny stock pump — courtesy of StocksToTrade.com

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…

SPOM chart
SPOM chart: 2-year, promoted penny stock pump — courtesy of StocksToTrade.com

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)

HMBL was my single biggest winner in years before it changed from TSNP. It had SO many beautiful dip buy opportunities.

HMBL chart: 1-year, another penny stock promoter’s pump — courtesy of StocksToTrade.com

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…

ENZC chart
ENZC chart: 1-year, arrested penny stock promoter’s pump — courtesy of StocksToTrade.com

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

tim sykes grand canyon
© Millionaire Media, LLC

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

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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…

Buying High: How to Get Rich on Pot Stocks.”

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…

Trading Challenge

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…

Apply for the Trading Challenge Now

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!

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