FINRA Rule 6460 - Great News for OTC Traders

All of you penny stock traders out there using Level 2 quotes - and we hope that's about all of you - have probably noticed something different lately. Effective May 9th, 2011 FINRA Rule 6460 requires the display of actual customer limit order sizes. Instead of just seeing '5000' share sizes, or whatever the minimum quote tier size is, you will see the actual order size for the best bid and ask for each market maker.

This is an incredible improvement and move to transparency for the OTC markets. Traders moving large orders will no longer be able to hide their true size on the ask, and manipulators that thrived by putting in multiple 5000 size orders via different MM's will no longer have any power. Traders will see right through the fake bids and asks, and know when true bid support or overhead pressure exists. This is a major change that will likely change the types of OTC stocks that run or stall, and the trading dynamics that lead to these moves. In theory you'll see trading activity that more closely resembles that of big board stocks.

This new rule also makes having Level 2 Quotes even more important and powerful, honestly by an order of magnitude in our opinion! If you don't have Level 2, there has never been a better time to sign up. Check out our Penny Stock Level 2 Quotes page to see and explore the best of the best.

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LEXG - Meltdown in progress...

We didn't call the top perfectly but our caution was well due... Here's an intraday chart.

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LEXG - Caution is in order..

We have to admit we never mentioned LEXG.. We thought it had a good shot at a run since it was being compared to, and looked similar to ALZM. You have to be wary when these 'sequel' type plays come out, however. Often times promoters and companies take advantage of traders and investors that think it's a sure bet since the last one worked. A lot of times they don't. We kept our lips shut, but now with LEXG coming up over $6 a share, from a starting point (of real, retail trading) around $1, we have to caution anyone that is in, or is still playing it. From what we have heard there is no real substance behind the company to justify the huge market cap at this point. The promo is likely near the end, the chart is going parabolic, and when the shorts have finally covered... look out below. We would not be surprised at all to see LEXG get halted. Usually this happens on the way down, but you never know. Just our opinion and nothing else, but be wary!

CHART - http://stockcharts.com/h-sc/ui?s=LEXG&p=D&yr=0&mn=3&dy=0&id=p74831638100

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CTSO - This could be huge..

Edited: Changes in bold.

If you didn't see CTSO trade today, be sure to watch it tomorrow. The company got EU approval for their CytoSorb(tm) blood purification system. This system is shown to save the lives reduce cytokine (toxin) levels of people with sepsis by almost half. Sepsis is a worldwide killer that affects an estimated 18 million people a year, worldwide. The question is how this reduction in cytokines will affect the mortality rate of patients suffering from sepsis, and to what degree.

CTSO stock made quite a move today, up 128% on over 22 million shares, with a close at $0.389. There is huge money flow here, and if it continues tomorrow we expect to see significant additional gains. This could be a great swing, and has the potential to be a nice longer term hold to $1+...

Here is the news.

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ALZM - Over $2 now...

UPDATED.. Again: ALZM up over $.90, and nearly 100% from our mentioning last week! Still working but if you're in remember to take profits! These type of promo runs eventually come to an end and a lot of times it's not pretty... Enough said.

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ALZM - .20+ Move so far...

We alerted you to the money flow on ALZM on Monday when the price was 1.08-1.10 and now the stock is trading 1.29-1.31. That's a .20+ gain that could have been played with 10,000 shares easily. Those with the funds and nerve to try it are up two grand at this point... Who says you can't make good money on bigger penny stocks??

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ALZM - Money Flow

We just want to point out ALZM as it is getting huge money flow as it is creeping upward. This is a story stock that appears to be just starting out under the ALZM ticker, and opening the doors with a major share based acquisition. From what we've read online and from newsletter alerts there is a huge mailer promo underway. Newsletters are jumping on the bandwagon and that is why you are seeing over 3.5 MILLION dollars into the stock today already. Now, there is a play to be had here still, and also a lesson to be learned.

The play is riding the momentum/money flow and making some profits. This is a penny stock that you could put 10-50 thousand, or more, dollars into easily and play it for a 3 to 10 cent move. It could go much longer and higher if the rumors are correct about this being a physical mailer promo, as the effect is more prolonged. As with any promo, there is risk involved, and that brings us to the lesson.

The lesson to be learned here is easily seen by looking at the chart. The stock moved from .35 to over a dollar between 3/7 and 3/10 on less than a million shares.. On Friday, as the newsletter alerts came out we saw volume explode to almost 10 million shares, yet the share price stayed in a relatively tight range, and didn't even break Thursdays highs!! We're talking about some 30 times the volume from the day before, and the PPS stays in a tighter range, and doesn't break into new territory! It is pretty easy to see there is selling/dilution going on in a situation like this. That is not to say it is a bad thing in this case. They're doing the promotion for a reason, and they're getting a company off into a new public venture. Think of it as an IPO.. We just wanted to point out what is going on here, and the signs of it in an extremely obvious case, so that you can learn and spot these situations with other stocks.

If you decide to trade ALZM, we wish you the best of luck. We will be watching from the sidelines, but we are very tempted. When promo's of this scale pop up we feel it is our duty to alert our readers, and that is the main point of this post. If you decide to play it, buy on a dip, with so many fresh shares being let loose it will certainly have dips along the way! If you buy the dips and sell the pops you could potentially play ALZM over and over and reduce your time of exposure significantly.

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