Using Volatility to Screen for Quality on the OTC BB
    and Pink Sheets
    August 19, 2011  PSW Staff
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MegaQuotes
    One way to help weed out the scam and promo stocks from the enormous list of
    unlisted securities is to screen for volatility.  OTC BB and Pink Sheet stocks are
    inherently much more volatile than listed stocks, so rest assured that even the least
    volatile of the bunch will still make bigger day-to-day moves than their blue chip
    counterparts.  We'll take a look at the five most volatile and five least volatile stocks on
    the OTCBB and Pink Sheets, and see if we can find any glaring differences, and
    possibly stumble upon some opportunities in the process.

    We eliminated stocks trading below 10 cents because had we not done so, the list
    would have been dominated by them.  You will still notice that the bulk of volatile
    stocks are lower priced, and the bulk of non-volatile ones are higher priced.  We also
    eliminated stocks doing less than 25 trades per day because some of the very lightly
    traded stocks will automatically make big moves from day to day as a lack of market
    makers means wide spreads between the bid and ask.

    Highest Volatility Issues

    POTG  (Portage Resources)
    Price:  $0.17
    Revenues:  $0
    Total Cash:  $533
    Shares Outstanding:  637,000,000

    UTOG  (Uniontown Energy, Inc.)
    Price:  $0.40
    Revenues:  $0
    Total Cash:  $30,000
    Shares Outstanding:  225,000,000

    PUNK  (EPunk)
    Price:  $0.33
    Revenues:  $200,000
    Total Cash:  $20,000
    Shares Outstanding:  25,000,000 (Recently Underwent 1 for 100 Reverse Split)

    HDSI  (HDS International)
    Price:  $0.29
    Revenues:  $0
    Total Cash:  $4,000
    Shares Outstanding:  538,000,000

    BERX  (Bering Exploration, Inc.)
    Price:  $0.52
    Revenues:  $0
    Total Cash:  $532,000
    Shares Outstanding:  24,000,000


    Lowest Volatility Issues

    FUQI  (Fuqi International)
    Price:  $2.92
    Revenues:  $476,000,000
    Total Cash:  $173,000,000
    Shares Outstanding:  28,000,000

    ADGI  (Allied Defense Group, Inc.)
    Price:  $3.02
    Revenues:  $142,000,000
    Total Cash:  $34,000,000
    Shares Outstanding:  8,000,000

    GALT  (Galectin Therapeutic)
    Price:  $0.91
    Revenues:  $0
    Total Cash:  $8,000,000
    Shares Outstanding:  74,000,000

    LOGL  (Legend Oil and Gas)
    Price:  $2.24
    Revenues:  $62,000
    Total Cash:  $52,000
    Shares Outstanding:  63,000,000

    ADPT  (Bering Exploration, Inc.)
    Price:  $2.78
    Revenues:  $0
    Total Cash:  $350,000,000
    Shares Outstanding:  108,000,000

    The obvious take away here is that less volatile unlisted stocks are of higher quality
    than high volatility ones, but it important to understand why.  Heavily promoted stocks
    will see big one or two day moves on no news, and then will see even bigger one or
    two day moves when the promoters and high risk lenders decide to dump their
    shares.  This means that on any given day, the highest volatility stocks will likely be in
    the midst of a pump and dump.  The lower volatility issues are more likely to have
    seen steady price movement in the past, and will see more sustainable price action
    in the future.  This is because they probably do not constantly issue press releases,
    and then spend more time disseminating them than actually growing the business.  
    Yes, you may not be able to acquire gigantic positions in these higher priced, higher
    quality companies, but you may still find substantial short-term gains and more
    importantly, live to trade another day.


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