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HPCS: Anatomy Of A Classic Pump & Dump

June 8, 2012: We noticed that HPC POS Systems (HPCS) was going to gap up off the pre-market action and following a series of promotional emails from StockRockAndRoll.com and its partner sites. We've been meaning to track and illustrate a typical Pump & Dump for a while now, and on the chance this was going to be a good example, we decided to track the action.  It turns out that Thursday's HPCS Pump & Dump was a classic example.

It's important to note, that Thursday's volume on HPCS was 29.3 million shares, exactly half of the total float as reported on April 17, 2012, according to OTCmarkets.com.  We're guessing that that number went up a whole bunch on Thursday, as obvious massive dilution took place. It's worthy to note that prior to Thursday, you would have to total the entire trading volume all the way back to April 18, to get to 29.3 million shares. On that date, the stock closed at 1.15 cents, a price the stock will never reach on Thursday, due to the continuous dumping of new stock into the float.  We'd estimate that the float is now over 70 million shares.

Let's look at the action.

It's 9:32am and trading is underway.  The share price gapped up 49% at the open, always a dangerous sign.  There are certainly plenty of bids out there though.




It's now 9:41am and volume has really picked up as the buying continues to push the share price up to a new high of the day, .0071. The dumping is already evident as almost an additional 1.4 million shares has traded in the last 9 minutes, but as we saw in the previous screen shot, only 68,700 shares were shown for sale to .007.



It's now 9:43am and additional 200,000+ shares have traded. The high of the day is still .0071, but there are a couple of bids there.



Here we are 10 minutes later at 10:53am and the dumping has begun in earnest, as it is evident that the stock is not going to get bid up any higher.  A total of approximately 3.34 million shares have traded by the time the stock trades at .0074 for the second and final time at 9:47am. The share price will not even come close to that level again. 6 minutes later, 27% was sheared off the high of the day, when about 1.26 million shares were sold into the market.



Another 5 minutes later, at 9:58am, and we have a bit of a rebound as the selling pressure subsides.  Still the next million shares of trading can't undo the damage to the share price that the previous 1.26 million did, and there's still more stock showing as available up to .007.



Plenty more actually.  By 10:14am, another 3.3 million shares trade and the stock has dipped again.



By 11:05am, it is evident that the buying has dried up and it's now time to smack the bids. Almost 3.9 million shares get dumped into the market over 51 minutes, driving the share price down to .0051.



At 12:11pm interest in the stock has totally evaporated. Over the course of 66 minutes, less than 200,000 shares has traded. Reportedly, $100K was spent on Thursday promotion and there hasn't been enough stock dumped to even come close to paying for the campiagn.  There is no choice but to dump more stock.




And the dumping recommences. Where only not even 200,000 shares traded in 66 minutes, more than 2.2 million shares get sold in the next 16 minutes, dragging down the share price at 12:27pm to .0046.



Half an hour later there is zero interest in the stock and it is time for the insiders to take what they can get. At 12:57pm the share price is in the red at .0041, but the bid is only .0039.1.23 million shares were sold into the market in that half hour.



By 1:24pm, another 1.5 million shares of selling has taken the stock deep into the red, now down 24.5%, where only a few hours earlier it was up 64%.



Point made, we jump to the closing numbers. After hitting a low of .003, a late print makes it appear as if the stock closed at .0045. The official closing price was .0037, exactly half of the high of the day, achieved in the first 17 minutes of trading.  As we said earlier, you'd have to add up the total previous volume back to April 18 to see how long it took for the previous 29.23 million shares of trading to take place.  Obviously, a lot of new stock entered the float on Thursday.




To StockRockAndRoll.com and the other HPCS touts' credit, they did not brag about how their pick jumped 64%, as most touts are apt to do, in order to paint a shiny face on a disasterous pick.  In fact, the touts have since dispicably acted like this pick never happened, by not commenting on the performance at all. At a minimum, a mea cupla would have been in order. But these touts are in the business of looking like stock wizards, so that wouldn't do.

As for HPCS, the company, the current $922K market cap, never mind this morning's $1.8 million market cap, seems excessive, considering it last reported having $29 in the bank. Things have not improved at all since the December Pump and Dump campaign, when the stock reached 14 cents and the public was promised that great things were to come.  In fact they have become much worse, as at least back then, the company had $684 in the bank and 45 million fewer shares. Then as now, no other assets were reported. HPCS truly trades on air.