The penny stock market was abuzz yesterday with the collapse of SNPK, the pump by several of the bigger stock promotional newsletters. A lot of people were wondering what happened? To understand what happened you have to suspend the thinking that stocks like these act like big board stocks. When you have such a sustained promotional campaign it eventually takes on a life on it own and keeps going up. Until it reaches that point where people take their profits.
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Once the profit taking begin it can start a cascade of selling which is what you saw yesterday. SNPK dropped like a rock through midday before finding a temporary floor. What investors need to realize is penny stocks are not for them. You do not buy and hold these. These are day trade to swing trade opportunities if you choose to play the game. Remember, take profits on the way up and be happy. Nothing lasts forever, especially with penny stocks. [Read more...]