China Logistics Group, Inc. (PINK:CHLO) Pump Abandoned, Starts Deflating

Yesterday China Logistics Group, Inc. (PINK:CHLO) was crushed on large-volume trading and closed over 44% down. The pump that drove the stock from well under a penny to $0.12 per share seems to be over and it may be all downhill from here.

China Logistics Group was first pumped on Jan. 6, and the price took off to on the first day of trading this week. Before the pump the stock was dead and forgotten by traders for months on end, priced at tenths of a cent. The pump helped CHLO explode on zero news or positive financial reports. The price surge was caused solely by the promotions and as it happens with such pumps, its short run came to an end.

The company released a press announcement, which is now mirrored in an official 8-K filing, stating it expects revenue for 2013 to reach $30 million. Such a claim would mean an increase of about 50% year-over-year, a feat that seems highly unlikely and which is based on in-house projections alone. Revenue is also not a sufficient indicator of success, as according to CHLO‘s filings, its revenue was consistently demolished by expenses and the company logged quarterly net losses in the hundreds of thousands.

Now the pumping has stopped and CHLO has begun sliding back to more realistic prices, with still a way to go. Even after yesterday’s ugly drop, the stock is about 1000% above its pre-pump levels. Promoters were silent yesterday, failing to send a quick round of hype emails as CHLO went up in the morning hours. The emails from Jan. 8 by promoters Stock Brain and Stock Hunter make it clear that they are done with CHLO and are moving on to a new pick. This means the company is left alone with its optimistic revenue projections and no other positive hard information to sustain the price levels.

Here is a small visual aid that shows what happened to previous Stock Brain picks that were abandoned by the pumper. In mid-July they ran a promo on Sky Power Solutions Corp. (OTC:SPOW) and the aftermath of pump can be easily seen on the chart.

We warned investors about CHLO and its very likely immediate future two days ago, when there was still a chance to get out of this and suffer no loss. The 44% drop was just the first no-pump day for the stock. There is much room for dropping further and a drop is highly likely, considering price movement was caused by pumps alone.

Investors are advised to do their own research and use official company filings instead of companies’ press releases and websites as their sources. OTC penny stocks targeted by pump campaigns are a very high-risk area and are best avoided altogether.