Todor Pichurov

China Logistics Group, Inc. (PINK:CHLO) Continues Pumped Chart Climb

by Todor Pichurov January 9, 2013
4CHLO_chart.pngAfter a ludicrous 1500% move up the chart on Monday, China Logistics Group, Inc. (PINK:CHLO, CHLO message board) shuffled another 166% yesterday to a close of $0.12 per share. The stock was propped up by a whole slew of pumpers who advertised CHLO in their emails.

We should pause and consider CHLO's chart for a moment. Technical analysis on pink sheet stocks may be irrelevant but we're not going to attempt that. What is immediately visible on the chart is that CHLO is a stock that was in deep hibernation for months, trading in very low volumes and mostly wobbling around half a cent per share. Now pumpers are trying to make everyone believe that this is the next big gainer on the market.

The company has not made any optimistic statements or come out with any hyped-up press releases, which could at least attempt to back the claims of pumpers. After keeping quiet for months, it was only after the pump success and the Monday price explosion that CHLO released something. Sadly, the release sounds just as baseless as the pumps. The company stated its belief that it could see yearly revenue of $30 million in 2013. The yearly report for 2012 is not yet in but using the first three quarterly reports and doing a bit of estimation, traders can see that yearly revenue of $30 mil would mean an increase of about 50% - a figure that is hardly realistic considering CHLO's past performance.

The company has little to be proud of in its books, despite its sizable revenues. Here are the latest numbers available in CHLO's Q3 filing for 2012:

  • $2.1 million in cash
  • $6.1 million in current liabilities
  • $204 thousand quarterly net loss

Over 2011 CHLO accumulated a net loss of $1.3 million. The company is also dealing heavily with related parties involving company managers. As of September 2012 CHLO owed related entities a total of $1.2 million.

The sudden surge of CHLO stock is not unexpected, as there was and still is strong pumper support for the company. It was however unwarranted, as the movement was fueled solely by the hype created by the promotional campaign, not by actual performance or optimistic news based on hard information. A pumped stock moving on promotions can only run so far.

Traders are advised to be very careful with promoted pennies as they tend to crash just as fast and as hard as they burst on the scene. Do your own research and don't trade on hype.

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