Home Stock Market Commentary Do Stock Traders Know What They Buy When They Trade Shares of...

Do Stock Traders Know What They Buy When They Trade Shares of NMC Health (OTCMKTS: NMHLY)? – Mike Swanson (04/28/2020)

Today in the US OTC market shares of NMC Health (OTCMKTS: NMHLY) are surging to be one of the most actively traded penny stocks today. The stock is up already over 16% this morning following a week of steady gains. Take a look at the chart.

There are many people who runs scans to look for stocks that are moving to jump on board and trade. Momentum trading works when a person is lucky and has a strategy to jump in and out. People who trade penny stocks are getting involved in NMHLY as you can see from these tweets today.

These type of traders tend to focus only on the short-term action. This begs the question though do they know what they are actually buying into? In fact the long-term chart of NMHLY shows us a stock that is not on a steady rise, but instead a stock that has basically gone to nothing over the past year.

This company runs a hospital chain in the United Arab Emirates and became a hot stock at one time trading on the London Stock Exchange and the US OTC as an ADR foreign listing. However people who closely watched the company and the stock found some problems. Infamous short-seller Muddy Waters issued reports accusing the company of engaging in accounting games and the company eventually became forced to admit that it had $6 billion in debts in a massive balance sheet revision.

This all created controversy and the stock was haulted for trading on the London Stock Exchange. Yesterday the company requested that its shares simply be delisted from that exchange for good. Abu Dhabi Commercial Bank announced a few weeks ago that it was launching criminal proceedings against people involved in the company. A lot of people follow Muddy Waters so there are probably many who shorted last year who cover now to take profits and help the stock go up when it is below $1.00.

This is what penny stock traders who chase this week’s price action in NMHLY are buying into. The rally in the stock market is encouraging people to try to find things to trade and chase. People are looking for things to buy to bet that when the US economy opens up that everything will boom. There are other stocks and sectors better than NMHLY in my opinion and I still like my top April stock pick.