Borislav Tonev

Arch Therapeutics Inc (OTCBB:ARTH) Still Feeling The Pressure

by Borislav Tonev August 20, 2013
5ARTH.pngMore than fifty emails, a landing page, a paper mailer brochure and around $2.9 million spent on a promotional campaign. This sounds like the recipe for an impressive stock movement and some tasty potential gains for the day traders who time their moves carefully. Unfortunately, we're not sure if there are many people who profited from the pump on Arch Therapeutics Inc (OTCBB:ARTH, ARTH message board).

Sure, the ones who knew about the huge awareness campaign beforehand probably did manage to yield some gains from the whole fiasco, but looking at the chart, we reckon that the number of people losing money is far greater. As we mentioned already, the ticker did manage to make an impressive run during the first two days of pumping reaching prices of well above $1 per share, but the peak was followed by a massive drop. After a couple of green sessions and a lot more red ones, ARTH reached its 52-week low of $0.341 on August 13, just over a month after the whole brouhaha started. Then, not without the help of the paid newsletters it did manage to recover some of the lost ground but, as we wrote in yesterday's article, some of the pumpers announced that they're moving on while other stopped covering the ticker.

We knew that ARTH's chances of survival without the help of the promoters are slim and, sure enough, when yesterday's closing bell rang, the ticker was standing at just $0.41 which brings the daily losses to around 18%. The first hour of today's trading session saw another slide towards the bottom of the charts and this all brings up the question: "Is ARTH in for another 52-week low?".

It's still way too early to say for sure, but we reckon that without the support from the emails, we might see some more investments get annihilated. But let's take a more optimistic viewpoint and see if there is anything that could possibly break ARTH's fall.

At this point it really is hard to come up with such a thing. The company did try to aid (intentionally or not) the huge promotional campaign by issuing a couple of press releases. The first one coincided with the start of the pump on July 8 and it presented the new management team to the general public. Then, there were a couple of announcements about some of ARTH's co-founders taking part in international conferences, on July 30 they updated their shareholders on their current activities and on August 6, they announced their plans for the future.

The PR's themselves contained very little useful information, but let's not forget that we're in Pennyland and right here, the lightest breath of wind is sometimes enough to cause massive fluctuations in share price. In ARTH's case, however, people didn't really seem to respond and the ticker continued on its way South.

Last week, we saw that some increased mailing activity might influence the ticker's behavior as there are still some inexperienced investors out there, unaware of what's going on exactly, but we reckon that even the most influential promoters will have a hard time picking up the pieces. Will they give it a go anyway?

Probably. The disclaimer on the landing page says that Full Service Media, LLC., the entity controlling the massive budget has received 2.5 million restricted ARTH shares in addition to the colossal amount of money. They say that won't be disposing of them until at least ninety days after the start of the campaign, but we're pretty sure that when they decide to start selling, they'll try to get rid of the stock at the best possible price. This means that further pumping efforts are not impossible, but when they will happen and how effective they will be, remains to be seen.

30NVLX.pngIn the meantime, you should also probably have in mind that some factors might exert additional pressure on the price. On the right, you'll see the charts for Nuvilex Inc (OTCMKTS:NVLX) and Northumberland Resources Inc (OTCMKTS:NHUR) - two small cap ventures that experienced (or are experiencing) an abnormally large amount of excitement around their shares. Last week a contributor on Seeking Alpha wrote about NVLX and said that the venture just isn't worth investing into. As we mentioned yesterday, it's up to you to decide whether you should trust him or not, but the fact remains that the article 66NHUR.pnghad a rather horrific effect on the stock. The same exact thing happened to NHUR on July 8 and, as you can see, the results were even worse. Some people accuse Seeking Alpha's contributors of crushing the companies' credibility in order to short sell the stock, but whatever the motives, the share price is the thing that suffers the most. Looking at ARTH's situation, we can see that a similar coverage on them is definitely a possibility and the effects could be absolutely catastrophic. Just one more thing to keep in mind while making your investment decision.

Comments 0

Type the characters that you see in the box (5 characters).