When you trade penny stocks and small caps, you’ll often see stocks run without any catalyst you can find…
Or a stock climbs for multiple days on some dubious headline and a press release with zero details…
It can be frustrating to sit out a trade and miss a big run because you didn’t want to buy something with a terrible catalyst — or none at all.
But that could be one of the best decisions you could make as a trader…
Because there’s a hidden catalyst that not many people know about. It can send stocks higher but it can also make them crash just as fast.
I’ll expose it today so you can learn when to avoid certain stocks and why some stocks go much higher than you thought — with or without news.
What Pushed NVOS Up 212%?
Just because you don’t see a headline or news catalyst behind a stock’s move — it doesn’t mean there isn’t a reason for the move.
In order for stocks to go up, it has to have buyers and demand. And traders don’t just buy a stock for no reason…
So what could bring buyers and demand to a stock with a fluffy press release or no news?
Chat pumps.
Penny stocks and small caps are notorious for being pumped.
They can be pumped on social media, in private chat rooms, or through email lists.
So even though you don’t see it, there are traders out there following others’ alerts and buying in on some kind of hype or the promise of quick profits.
Take Novo Integrated Sciences, Inc. (NASDAQ: NVOS) for example…
It was running on Tuesday in premarket — it had a 9 a.m. press release — but I didn’t love the news as you can see from my reaction to reading it…
It was just some lame news about an agricultural partnership. It’s not like it was a low-float biotech with cancer news. Or a tech stock with AI news…
So why did the stock go from 7 cents all the way to over 26 cents yesterday on such ridiculous news?
It’s not short sellers — they wouldn’t short a stock trading for less than 10 cents…
It’s the hidden catalyst…
The chat pump.
Remember Atlas Trading? The group of traders was known for pumping massive stock runs like ContextLogic Inc. (NASDAQ: WISH)…
And their last big pump, Camber Energy, Inc. (AMEX: CEI), went from roughly 50 cents to almost $5 back in September 2021.
CEI chart: 2-year, daily candle — courtesy of StocksToTrade.com
As you can imagine, now all their pumps are down huge. And anyone who believed their claims that these stocks were going to $10 or $100, are now stuck holding the bag.
Most of the stocks have since done reverse stock splits just to try to stay listed.
Watch my reaction video to the Atlas Trading takedown here.
I even predicted in that video there would be more pumps in the future … And here we are…
There’s a new chat room in town called Moon Market.
They talked about AEye, Inc. (NASDAQ: LIDR) when it was bouncing off the 25-cent support level a couple of weeks ago before it ran to 80 cents…
LIDR chart: 6-month, daily candle — courtesy of StocksToTrade.com
They were also behind the run in NVOS, comparing it and saying it could be the next T2 Biosystems, Inc. (NASDAQ: TTOO) in a video that went live on their YouTube channel after hours on Tuesday.
In that video, they also claim to have alerted it in their discord chat room when the stock was at 8 cents that morning.
And you can see where it went from there…
NVOS chart: 2-day, 5-minute candle — courtesy of StocksToTrade.com
It went from 7 cents to a high of 25 cents.
So are these pumps a trade? Or should you avoid them?
I say as long as you know what they are, you have a pattern to trade, a risk management level, and you can follow the rules for chat pumps — then shoot your shot.
But if you’re new, you don’t have a strategy or system to trade and you’re thinking about just buying their next alert and holding it…
Stay as far away as you can.
You can look back at old Atlas pumps or even the LIDR chart and see where all these pumps end up…
Some of them go even lower than where they started. So don’t be a believer. Know what you’re trading and always have a plan.
We’ll show you a system that can help you navigate the markets here — and it’s free to attend when you sign up with your email.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade