Syndicate
Analyzing the OTCBB
We will put it this way, Imagine that the stars and planets were correctly aligned and your stock announced that it was moving to a larger exchange. Which exchange would you expect your OTCBB stock to graduate on? Our analysis of OTCBB data from 2004-2005 shows that of securities that moved to larger interactions, 2% went to the NASDAQ, 8% went to the NYSE, and 90% went to the AMEX. So, odds are that your stock is headed for the AMEX. No problem whatsoever. You are still overjoyed that your stock has finally made the move from a premature phase to an advanced phase. Now, what kind of performance should you expect from your stock now that it has moved to the big leagues?
Just as we had done in the past, a large amount of people assume that because a stock is being listed on a larger exchange, its price is going to magically skyrocket. We are going to show you that this is generally not true. When we analyzed 30 stocks that jumped from the OTCBB to larger exchanges in 2004-2005, we noticed some interesting trends. First of all, in the six weeks previous to a stock being listed on a major exchange, a common appreciation of 22.7% was noted with extremes of 160% gains and 31% losses. Now, before you get too excited and dash out to scour the internet for stocks announcing moves to superior exchanges, pay attention to this interesting tidbit. On average, a good number of companies only gave a few days notice previous to graduating to a larger exchange. I found a few instances where companies gave two weeks notice of their approaching move to a larger exchange, but most companies only gave two days notice. Many times a corporation would give absolutely no notice that their stock was graduating. They would simply issue a press release stating that their stock was moving to said exchange effective immediately. Despite of the lack of pre-notification of the stock's impending graduation, it was interesting to note that six weeks previous to the stock moving to the larger exchange, there was often a considerable increase in volume. Where did this volume come from? Could it be that investor speculation of a move to a larger exchange drove this volumetric push? Possibly. We checked the message boards for many of these stocks and did without a doubt find rumors abuzz about moves to the AMEX, and NASDAQ. Nobody ever thinks that their stock is going to the NYSE and they always seem to hold their breath for the NASDAQ. We ask ourselves, why this is so? With only 2% of OTCBB Stocks moving to the NASDAQ and 8% moving to the NYSE, it seems somewhat obvious where the stock is going to go. That's right; most stocks are headed for the AMEX!