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NXTH | Pump and Dump of the Year

NXTH Pump and Dump

NXTH Pump and Dump

I have been watching NXT Nutritionals Holdings, Inc. (NXTH) for quite a while.  It has been perfectly pumped up 5 cents or so every single day for a month.  I knew it would eventually crash so I was always looking for shares and found some a few weeks ago at around 2.50 to short.  Well the NXTH continued to rise and at $2.69  so I covered the short and took a small loss and watched it go up.

Today I decided that if I can’t beat them I would join them and I would buy a bunch a shares at 3.44 and hold for a day or two and sell in the 3.60 range.  The stock was so steady; I figured the risk of the crash over the next two days was very low.  I put in a buy order for 5,000 shares with Ameritrade but the order was rejected and I got a message that trades with NHTX needed to be placed over the phone.  I looked for the phone number but then noticed the stock price starting to jumping around a bit instead of the slow steady climb I was accustom to seeing and held off on my purchase.

Then no more than 5 minutes later the stock started to plummet.   I always joke that I have a knack for buying a stock at the exact turning point but this would have been ridiculous (and expensive)

How did this NXTH go up for 30 days straight then plummet 60% out of the blue?  The prevailing theory is a group of investors and promoters kept buying this stock each day, sucking other people in along the way because of the nice steady uptrend.  Then today they decided to start taking profits. Then with the first 2 cent down tick the panic started and stock spiraled into a crash.  If you look at the monthly chart, it is the cleanest uptrend chart I have seen until the inevitable crash.

I had an alert set to notify me the second the stock dropped two points.  I immediately tried to short at $3.10 but of course no shares were available.  I was not able to make money on the crash, but at least I did not lose like many traders out there did today.

The moral of the story is with every pump there is a dump – eventually…

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Article source: http://www.penny-picker.com/blog/2009/10/27/nxth-pump-and-dump-of-the-year/

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