Pump and Dump JYHW?
Is JYHW another Pump and Dump? Who knows for sure, but let's take a look at a chart below to see the latest price action in this stock.
I've written about the chart patterns in JYHW recently here: Multi Day Trade Setup JYHW.
In this previous article, I showed how prices were breaking out to new chart highs and pointed out that prices have more than doubled recently, making this a "potentially risky buy".
I had received several emails from stock promotors "pumping" the stock recently, so a "dump" was probably inevitable.
If you look back at the chart below, (which is from the previous article) you can see that buying each/any of the breakouts at point 1), 2) and/or 3) with a stop loss just below the breakout point (which was previous resistance) would have worked out nicely.
Breakout 1) would have produced a small loss while 2) and 3) would have produced profits.
Now take a look at the next chart, which seems to clearly display the "pump and dump" in JYHW occurring. The chart if displaying January 15th, 19th and 20th.
Looking at this chart, you'll see that if you happened to enter long on the last day on the chart (January 20th) near $2.15, you would have been long during the big "dump" that occurred.
If you would have entered long near the same price but used a stop loss just below the previous days' breakout point of $2.08, you could have minimized some of the potential losses. Another thing noticeable is that prices immediately began to move lower from the $2.15 price area. This occurred within the first 5 minutes of trading, which is one of the most risky times to enter a position.
Also, having waited 15 minutes or so to determine if the breakout was even going to hold or not, would have saved potential losses because the breakout proved to be a fakeout/reversal.
So to review some of the observations here and from Multi Day Trade Setup JYHW:
- Both of these articles refer to chart patterns and setups for short term, intraday trading opportunites using multi day charts for trade ideas.
- Entering the breakouts with tight stop losses would have produced good results while helping to minimize risk on each trade.
- Waiting until the first few minutes of trading were passed, would have potentially avoided entering on the final false breakout shown, and helped to avoid being caught in the "dump" that occurred.
The second chart above displays the potential risk involved with jumping in long on a "pump and dump". Doing research on companies to try and determine whether or not their stock is worthy of your time trading must be done before making the decision to enter the trade.