$HUDI Why Robert Knight Thinks This Pattern is Dangerous to Trade- Video and Transcript
On October 29, 2021, Turbo Trading's Head Trader Robert Knight, MBA used Stock $HUDI as an example to show potential manipulation in a stock. He points out the pattern demonstrated in this stock and explains why it is one successful trader's opinion to avoid trading. A transcript is below the video.
I wanted to discuss this chart pattern, $HUDI, and the results of it, and what it looks like to me. Now, this is a new issue who Hudi international group probably is Chinese stock. I'm not sure, but you can see it never traded here. Let's just quickly have a look and see how many shares are outstanding on it. It's a very thin stock, just over 3 million, 3.1 million share float. So it's an ultra little float stock, and it never trades. And then all of a sudden, you know, it starts to go here now in up itself, a couple of moves here, one, two, you know, maybe three or four or five moves like this is a reasonable position. But 2, 4, 6, 8, 10, 12, 14, 16 days straight up. And what you see is that it opens where it closes and then closes near the high of the day. And then it opens where it closes, closes near the high of the day, and keeps going like that.
This is to me is, I don't know for sure, I mean, I can't say because it's still trading. But in my experience, this is like a pump and a dump or it's worse than that. This type of pattern, I'm not saying that this stock is necessarily because I don't have any insight on it, what the information is. But when I see this pattern like this, this to me is a clear sign. This pattern is a clear sign of a manipulated stock. It has some range, you know, 50 cent range now four, seven. So a $1.50 range on these. $8.30 to- you a couple dollar range. So that's a bit more range than you would normally expect on a manipulated stock.
You usually see 5, 10 cents, 15 cents as it stairsteps its way up. But because this is so low float, it has a bit bigger range to it. So whenever I see this type of pattern, I never trade these stocks once they get going like this, because it's too dangerous way too dangerous. There are two reasons for that.
One:
Look at the sell-off from $30 to $15 in an instant right drop pre-market pop back up, and then boom just gets crushed $10. And with no chance to get out, sells off, halt, sell off, halt, halt all the way down. So very, very dangerous to trade these kinds of stocks that get this type of pattern.
One of two things happens. One, you get this huge correction like this because the insiders or who's ever promoting it, they're off all their papers. They're gone so they don't care. They just let it drift fall and maybe, you know, reorganize the company and do it all over again. But you know, you take the stock from $3 to $30 it's 10 times your money and the volume comes into it, you know, a million, 2 million. So they can get off their paper. And keep pumping it up until they finally get rid of all their paper, then they just walk away and the stock comes off. So you get two things that can happen. One, you get this type of sell-off.
Or two:
Anywhere in here, you could get the SEC or, you get the regulators halting it. And if they find anything nefarious, then it gets suspended and it doesn't come back. They can halt it for 10 days and after 10 days, they have to make a decision. And that is to either; let it resume to trade or suspend it. And if they hold it for 10 days, you can bet, they're going to suspend it.
And they could suspend it for, I think 90 days. I can't remember if it's 30 or 90, doesn't matter. I think it's 90. And after 90 days, they have to make a decision either to delist it or have it come back to trade. And what you'll see quite often when it comes back to trade, then it'll just come back on pennies.
Because the gig is up. So not saying that this is a manipulated stock or a pump and dump, I'm just saying that this pattern represents that type of trade. And whenever you see that type of pattern going like that, I mean, you can ride it at the beginning, but once it starts going, you know, you want to be off your paper.
You want to sell it with them. Not all of it. You can just piece it out so they've got a lot of profits. So at the end here, when it does collapse you've got big protection. You still maybe have a little bit left, but you are out of most of your stock. As soon as I saw this, I didn't trade it.
I just, I just ignored it. What if I had got in and said, ‘Oh, Hey, this looks good at $15. And you know, here at $20 and thinking that it could go to $40 or $60 and boom off it comes. So just be careful of that pattern, if you see it.
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