Disclaimer : This is my personal blog. Author will NOT be responsible for information errors, incompleteness or delays or for any actions taken in reliance on information contained herein. Examples in this blog are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The author assume no responsibility for your trading results. There is a high degree of risk in any form of trading and speculation. Trade at your own risk.

Monday, September 15, 2014

How A Stock Pump And Dump Works?


You may have seen a stock pump and dump underway the last couple of months in the local stock market for any number of small cap companies. 
The whole reason behind a stock pump and dump is for the stock pumpers to profit.
These pumpers – some person, or some group, buys shares in a company.
They promote this stock to other investors.
The share price rise due to the other investors buying the stock and the pumpers sell their shares at a premium to other investors.

5 Steps In A Stock Pump and Dump 

Step 1 – The Bait
This is the first step where the pumpers share the “good news” on a stock they bought earlier.
They spread the good news via personal emails lists, stock forums, money magazines, social media, words of mouth (via broker) or even go as far as getting the newspaper to write an article.
During The Bait stage, popular sentences you always hear -
“The company is negotiating some hundreds of millions ringgit project”
“The stock is undervalued and have huge upside potential”
“The stock is dirt cheap … you don’t want to miss out when the ‘good news” come out …. soon!”
“The stock is 20 cents with the target price (TP) of $1.20 …that’s a 500% gain!
Could this possibly be true?
 Step 2 – The Rally
During this phase, the stock will start moving aggressively with the people who read the "good news" buying and pushing up the share price and daily volumes 5 to 10 times higher than when the first “good news” posted as the bait was released. 
 And every day, for the next week, next two weeks, next month, you’ll see those same subject lines with the same calls to action: Buy, buy, buy…good news coming soon! Target price $1.50 …. jump in now!
And if you’ve already bought, the goal is to get you to buy more.
Step 3 – The Sell Off
The stock pumper generally refer to this as a “temporary profit taking.” In other words, they’re blaming a group of investors taking some profits who are driving down the stock prices.
However, the more likely culprit here is that all those pumpers who bought up million-plus share positions early on and are starting to dump their shares onto a very artificial market.
Unfortunately for the other hapless investors, most of those shares were sales executed by these pumpers as the stock plummeted below the price where most of them bought in.
Step 4 – The Rebound
Eventually, with enough work, enough spam, and enough new names pouring in thinking they are getting a bargain, the selling tide abates and the stock moves up again.
During The Rebound, popular sentences you always hear -
“The stock is a bargain at this price, buy now before it move again!”
“The stock is technically oversold and ready to resume its rally!”
“I just bought 300 lots at this cheap price.Getting ready for the bounce.”
In the next couple of days, the price does indeed recover, maybe as much as double from its sell off lows.
Step 5 – The Demise
In this stage, the stock slowly drop and keep dropping for weeks and months till all the selling dry up.
There is no more “good news” or is usually the case, no news on the stock at all.
All the stock pumpers have left the stock and they are promoting a new hot stock to new investors.
All we know, based on the pumper’s subject line, was that any chance for more gains on the stock pretty much went up in smoke the moment they came out with a new stock pick.
Conclusion
Legitimately promoting stocks is accepted, ethical, and if done right, profitable for everyone – investors and owners alike.
However, an evil cousin of legitimate promoting is a stock pump and dump.
Designed to be little more than a short-term artificial boost to the share price of a stock, stock pump and dump generally last only as long as it takes for those who financed the pump to sell their shares on their unsuspecting fellow investors.
Don’t be fooled by these stock pump and dump scams in the stock market by learning how to invest wisely on stocks.
(Editor Note : This article is useful to know more about the stock pump and dump operations going on in our stock market. Hopefully it can help you avoid these scams. The original article was copied from How A Stock Pump and Dump Works @ Shareinvestormalaysia.com)

Saturday, September 13, 2014

Raya Cheer Soon ?

Raya Stock Chart 

1)Salient Observations : -

*Bullish Flag Pattern

*Volume Increasing 

2) Major shareholders buying into the stock 



Changes in Sub. S-hldr's Int. (29B)

RAYA INTERNATIONAL BERHAD


Particulars of substantial Securities Holder

NameTAN SENG HU
AddressNO:11, JALAN PJU 19/13B
TAMAN PUNCAK JALIL
43300 SERI KEMBANGAN
SELANGOR DARUL EHSAN
NRIC/Passport No/Company No.760425-14-5013
Nationality/Country of incorporationMALAYSIAN
Descriptions (Class & nominal value)ORDINARY SHARES OF RM 0.10 EACH
Name & address of registered holderTAN SENG HU
NO:11, JALAN PJU 19/13B
TAMAN PUNCAK JALIL
43300 SERI KEMBANGAN
SELANGOR DARUL EHSAN

Details of changes

Currency: Malaysian Ringgit (MYR)
Type of transactionDate of change
No of securities
Price Transacted (RM)
Acquired09/09/2014
250,000
0.180 


Circumstances by reason of which change has occurredACQUISITION OF SHARES VIA ON MARKET
Nature of interestDIRECT
Direct (units)5,574,200 
Direct (%)4.7 
Indirect/deemed interest (units)11,000,000 
Indirect/deemed interest (%)9.28 
Total no of securities after change16,574,200
Date of notice12/09/2014

Changes in Sub. S-hldr's Int. (29B)

RAYA INTERNATIONAL BERHAD

Particulars of substantial Securities Holder

NameTAN CHENG KIAT
AddressB15-5, THE ISTANA CONDOMINIUM
NO: 1, LORONG UTARA B
OFF JALAN UTARA
46200 PETALING JAYA
SELANGOR DARUL EHSAN.
NRIC/Passport No/Company No.480206-10-5533
Nationality/Country of incorporationMALAYSIAN
Descriptions (Class & nominal value)ORDINARY SHARES OF RM 0.10 EACH
Name & address of registered holderTAN SENG HU
NO:11, JALAN PJU 19/13B
TAMAN PUNCAK JALIL
43300 SERI KEMBANGAN
SELANGOR DARUL EHSAN

Details of changes

Currency: Malaysian Ringgit (MYR)
Type of transactionDate of change
No of securities
Price Transacted (RM)
Acquired09/09/2014
250,000
0.180 

Circumstances by reason of which change has occurredACQUISITION OF SHARES BY MR TAN SENG HU, BEING HIS SON.
Nature of interestINDIRECT
Direct (units)11,000,000 
Direct (%)9.28 
Indirect/deemed interest (units)5,574,200 
Indirect/deemed interest (%)4.7 
Total no of securities after change16,574,200
Date of notice12/09/2014

3) Corporate development coming?

The Edge weekly 18/8-24/8 Page 24.














*Possible injection of assets from Tony Tan

Tuesday, September 9, 2014

A Simple BOLLINGER BANDS Trading Strategy That Works!

I knew about Bollinger Bands a long time ago but never was interested with this strategy until a few weeks ago. Then I begin by observing the simple Bollinger Bands on a few stocks and they look promising.

What Are Bollinger Bands?

Bollinger Bands® is a technical analysis tool created by John Bollinger in the '80s, and they have quickly become one of the most commonly used tools in technical analysis. Bollinger Bands® consist of three bands - an upper, middle and lower band - that are used to spotlight extreme overbought/oversold in a stock.


Bollinger Bands - KENANGA




The upper band represents overbought territory, while the lower band can show you when a security is oversold. You can use this tool for free on Tradesignum (under TA Charts).

Most technicians will use Bollinger Bands® in conjunction with other analysis tools to get a better picture of the current state of a market or security.

A Simple Bollinger Bands trading strategy is just looking at the Bollinger Bands without other analysis tools - the stock trader BUY the stock when it goes below the oversold/lower Bollinger Band line and SELL when the stock goes above the overbought/ upper Bollinger Band line.

It seems to work most times like with TA as shown below -

The main problem is the ENTRY POINT of the trade - sometimes the stock can remain oversold for a while and IF you enter just below the lower Bollinger Bands line, you get trapped!

The trick to overcome this is to enter the trade only when the share price show a confirmed uptrend on the closing the following day.


Exit point can be the mid-point of the Bollinger Bands or if you think the stock is strong the upper Bollinger Bands point.


I am currently following the Bollinger Bands (BB) on GPACKET stock.
















GPACKET went below the lower Bollinger Bands (BB) line on Sept 1 (after the poor quarterly results on Aug 29) and then rebounded the next few days to above the lower BB line (see chart above). It is still in uptrend mode and is currently above the mid-point BB line around 36 cents. IF the upper limit of the BB is achievable, that should be around 42-43 cents. Of course every strategy have the limitations so please trade at own risk!

(Further Reading : A Simple Bollinger Band Strategy)

 

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