Kaloyan Gadzhev

Hopes of Naive Traders Crushed by Sky Power Solutions Corp. (OTC:SPOW)

by Kaloyan Gadzhev July 17, 2012
1SPOW_chart.pngWhen you go to a crash derby you want to see cars crash. Seeing your stock crash, on the other hand, isn't all that funny. Our condolences to those who failed to see the Sky Power Solutions Corp. (OTC:SPOW, SPOW message board) pump fiasco coming.

After a gap up open SPOW crashed spectacularly, leaving little chance if any for people to get out without significant losses. Approximately 13.7 million shares changed hands and at the end of day SPOW closed down 22.22%. It should be noted that for those who got in on the pump the loss would have been in the vicinity of 60%.

How could have traders known what would happen? There were a number of tell-tale signs. For starters, SPOW is a one-man show with almost no assets and no revenue.

Additionally, this 8-K shows that on June 11 SPOW issued 75 million shares in conversion of debt. This was actually 3 times the number of outstanding shares prior to June 11.

What's worse, the conversion was carried out at $0.01813 per share, and the shares seem to have been freely tradable. The volume from yesterday suggests there are still about 60 million remaining.

AEDC_fail.pngWhen trading OTC stocks researching the paid pumpers is often as important as researching the company. In the case of SPOW one of the promoters is Stock Brain. Two examples of the excellent picks provided by this newsletter are AEDC and DHSM.

It seems the main point the pumper is trying to put forward is a technical pattern in the chart of SPOW. While technical analysis may have its merits, when it comes to OTC stocks it means nothing. Still, $15 thousand is apparently enough to pump a stock like SPOW.

DHSM_fail.pngIt appears that $35 thousand is enough for the other pumpers to stick with the dead horse even after it has crashed and lost money for traders. Somehow the Stock Connection group accounts for the morning massacre as a +44% move, and encourages traders to keep an eye on SPOW for a rebound.

Surprisingly or not, the rebound never came. Hopefully, the people who lost money on this one will not neglect to do their due diligence next time.

Comments 1

1. Guest
October 15, 2012, 05:35PM

Quotes The pumper is named Salim Rana sr@salimrana.com and should be avoided at all cost.

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