Thursday, July 10, 2014

* How Garbage Stocks, Schemes & Violent Backlash Can Lose You Everything

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NEWL is trading $0.10, unchanged on the day. The Symbol Summary is included below.

Provided by Livevol

This is simply a reminder and hopefully a cautionary tale to some of the absolute absurdity that is happening in the retail stock market world.  This is also a shout out to StockTwits and another reminder: we can make it even better.

While the topic of the day is CYNK, a stock that is up 30,000% to $6B even though it has no employees, no revenue, no assets and isn't even a real company, this has happened before, granted in not so grand a fashion, many, many, many times.

CYNK - Is this the Most Egregious Capital Markets Scheme Ever?

The only people losing money in these stocks are retail investors and the intense fervor that comes along with them from trolls (pump & dumpers) will lose the everyday traders (it ain't investing) everything.  Further, this behavior either creates bubbles or worsens them. Let's not do that.

First some of my tweets in June are included below:

NB: I later sent a correction about the market cap, it was in the hundreds of millions.

I wrote those tweets because of the ridiculous interest in the stock (not the company) on StockTwits back in June. It was easily a top trender every day for at least a week.

No problem with that. It was news worthy, or at least attention worthy, and only ST had it right. The community said: 'Pay Attention!' That's the good.

But, any bad word about the firm received vigorous if not violent backlash (but only from a very peculiar group of people... not everyone). I'd share that backlash here but I blocked those members and the tweets disappeared from my stream (which I consider good news).

The attention the stock got from pump and dumpers (this 'peculiar group of backlashers') almost certainly trapped well meaning investors (Disclosure: I have no hard evidence of that statement, it's an opinion).

StockTwits is a phenomenal social media platform, certainly the best of its kind ever (IMHO).  But, its success draws in the cheaters (as with all successful social media sites -- like porn took over MySpace).  Let's make it better by finding the cheaters and reporting them. We owe it to ourselves.

Anyway, here's what happened to NEWL.  And it will happen to CYNK... and many more.

The Charts Tab (two-years) is below.

Provided by Livevol

The stock hit a high of ~$40 and is now $0.10, down more than 99%.

But it got even crazier when the stock was ~$0.40 and I posted those tweets (above).  The volume was exploding... Since then...

Provided by Livevol

... the stock is down 85%. Luckily the attention on the stock has died, unfortunately every dollar invested in it has as well.

The moral of the story: These are not investments or trades. These are traps. Please be careful.

This is trade analysis, not a recommendation.

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