Monday, September 21, 2020

How Information Inefficiencies Cause Penny Stock Supernovas

Penny Stock Millionaires

How Information Inefficiencies Cause Penny Stock Supernovas

  • How I consistently capitalize on penny stocks…
  • Spotting information inefficiencies...
  • And the delicate short-selling dance…

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Timothy SykesDear Penny Stock Millionaire,

I want to show you the single BEST reason you should be trading penny stock supernovas. 

No, it’s not just that penny stocks are cheap. Or that many of my top students have exponentially grown their accounts trading penny stocks. 

It’s not even that they’re more volatile and can spike 100’s of percent in a day. 

I mean … after that list alone, what’s not to love about penny stocks? But here’s what I think is the best reason… 

The one everyone should care about… 

The number-one reason I love penny stocks: information inefficiencies. 

You’re probably thinking … “What does that meanInformation what?”

Don’t worry. ‘Information inefficiencies’ is just fancy talk for…

How I Consistently Capitalize on Penny Stocks 

Most people hate penny stocks. They don’t understand my rules and usually lose money until they give up. 

They treat penny stocks like lottery tickets — believing they found the next Amazon (NASDAQ: AMZN). 

NEWS FLASH 

Penny stocks are mostly garbage. You didn’t think I was dumb enough to actually believe in their scammy stories?

They’re TRADING vehicles — not investments. My students and I take advantage of the volatility. We trade them when they’re hot and ignore them once they complete the Penny Stock Framework. 

That brings me back to… 

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Why Penny Stocks?

Because I’m actually smarter than the competition. Listen… 

I’m not a smart guy. And not all my top students were A+ students in school, but… 

We’re consistent in trading penny stocks because we’re playing against idiots. 

Idiots believe the press releases. They load up on the sketchy companies and get burned. While I play repeatable, predictable patterns. 

Sykes Tweet

Let’s do some basic math (hang on … trust me)... 

Less competition = More opportunities for me 

Dumber competition = Easier opportunities for me

I’m not a mathematician … but it's clear to me that penny stocks are the best niche in the stock market. They offer more easy opportunities than any other niche. Penny stock supernovas create incredible opportunities.

Back to… 

Information Inefficiencies

For decades, scholars have debated whether the stock market is efficient. 

In my opinion, it's a bunch of bogus … But an efficient market would mean that at any given time, the price of a company’s stock accurately reflects the actual company’s value. In other words… 

All news, world events, developments, and business operations are baked into the price. If this were true, there’d be no way to take advantage of stock movements. Fortunately, penny stocks are FAR from efficient. 

This is where it gets good… 

Real companies (large-caps, blue-chips, etc.) are close to efficient because so many highly educated people watch them ALL DAY. They have advanced math models and complex computer algorithms to take advantage of any tiny inefficiencies. But… 

Who’s looking at penny stocks? Dumb people … and me and my top students. 

Without the smart, well-funded Wall Street crowd, news spreads slow. What would take seconds on Wall Street sometimes takes days in penny stocks.

So if you prepare, understand the patterns, and use this revolutionary tool… 

You can learn to take advantage of information inefficiencies too. 

Here’s an example… 

Creative Realities, Inc. (NASDAQ: CREX) Penny Stock Supernova

On April 28, 2020, Creative Realities changed its website to pivot to a more coronavirus-pandemic marketplace. 

For large companies, a pivot like this is huge news to shareholders. But CREX redesigned its entire website without a press release … until the last two hours of the market day. 

I want you to focus on the morning action. Pretend like you’re seeing this chart for the first time. 

Chart

Somehow, traders discovered the website redesign before the press release. This discovery excited many traders. It meant CREX had an upcoming catalyst. 

Traders started to buy the rumor that there would be a press release later that day. Unfortunately, if you weren’t using this revolutionary tool's social scanners … you probably didn’t see the stocks movement until it was too late.

CREX’s failure to have a press release is a perfect example of an information inefficiency in penny stocks. Traders had over five hours before the company announced its website changes. 

We’ve seen this pattern a lot recently. Companies like CytoDyn Inc. (OTC: CYDY), Decision Diagnostics Corp. (OTC: DECN), and AgEagle Aerial Systems, Inc. (NASDAQ: UAVS) preannounce catalysts like conference calls. These announcements can make people want to be in the stock before the call … That results in a classic “buy the rumor, sell the news” situation. 

Although we’ve seen the pattern a lot … I think CREX is better because the company didn’t have to make a preannouncement. Traders started promoting the stock themselves (more on that later). 

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Reviewing CREX 

I never trade choppy stocks well because I cut my losses quickly. When I enter a trade, I want to see it follow my trading plan immediately. If it doesn’t, I’ll exit and wait for a better time to enter. 

I missed the best entry on CREX because I was being extra careful. I wanted to make sure CREX had the attention of real traders before I entered. Nothing’s worse than being fooled by low-level promoters. 

Remember … most chat rooms consist of an unknown ‘guru’ alerting a ticker to subscribers with a vague message telling them to buy now. 

That kind of chat room environment is sketchy. That’s why I’m proud to be fully transparent. 

Sykes Tweet

Every time I alert a trade, I write a full paragraph explaining my thesis and outlining my trade goals. It’s critical to have a trading plan for every trade. 

Learn the process. Once you understand the process … you can become a self-sufficient trader. 

Promoters and Short Sellers — A Delicate Trading Dance

How did shorts get squeezed so quickly? It’s a delicate dance… 

CREX first started to spike because a few chat rooms were promoting it to their members. At first, I wasn't sure if the volume was based on the website change or if it was just chat rooms promoting it to each other. 

You gotta be careful. Sometimes stocks run because of a small promotion. In this situation, there’s no real demand … and the stock will quickly fail. 

So watch out for that. Whether it's a morning spike or a company with news, there are so many chat rooms these days that promote stocks to subscribers. 

I’d be a lot more popular and have a lot more students if I was like the other chat room ‘gurus.’ But I don’t care about making money trading. I want to teach you to become a trader. I’ve already made millions in the stock market.* 

What’s the point if I’m the only one making money? I want more successful students. 

That said … I’m very grateful for the promotional chat rooms. They create awesome opportunities for me and my students. I’ll keep saying it… 

The best promoters right now are short sellers — please don’t tell them! 

They’d hate to realize the market they’ve created. Short sellers are so high and noble. In their twisted minds, they think they’re doing the world justice by shorting these penny stocks. Little do they know that they’re the biggest reason these stocks go higher. 

Short sellers act like angry vegans (no offense). They scream their exact positions all over the internet. I’m sorry … but I didn’t ask. Thanks for the awesome penny stock supernovas though.

Anyway, breaking down the dance for CREX … it was initially pumped by the chat rooms. Yeah, it had catalysts, but did it justify a 70% spike? I don't know… 

Then the noble short sellers tried to short it and failed. It all resulted in a huge squeeze my students report nailing. 

This little ballet is awesome. Let’s review. Chat room promotions lead to short sellers selling ... which leads to more promotion ... and then a huge penny stock supernova. I LOVE it.

Conclusion 

The reason I actually have millionaire students is because I’m teaching a process. I teach repeatable patterns that continue to work with penny stocks. 

Be careful chasing short squeezes. Yes … I chased and profited,* but it can be very dangerous. Short squeezes aren't always as successful as CREX. 

At the end of the day, I don’t care about CREX or the news. 

I care about the supernova dance. It happens a lot with different stocks. 

It's funny that shorts are better promoters than the promoters themselves. I’ve tried to help them but they don’t listen. Oh well. 

It just means there are more opportunities for my dedicated students. 

Do you think you have what it takes?

Talk with you tomorrow,

Tim Sykes
Editor, Penny Stock Millionaires

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