Here's what usually happens during pump and dump stocks (I also explain it when I write penny stock articles or promoting such products):
1) Someone or even the "CEO" of the penny stock company pays a "guru" to create a hype on the penny stock.
2) The guru, usually own several "free penny stock newsletter" sites get a compensation from the third-party and immediately blast his email. He could even hire people to post in Yahoo Finance groups to get more attention on the particular penny stock.
3) When the market opens, everyone start buying the stock. Demand pumps the price and the bid ratio gets higher and higher. The price soars quickly because penny stocks are very sensitive to supply and demand as compared to normal stocks due to their high market capitalization. And since penny stocks are usually priced less than a dollar (usually $0.08-$0.50), people will buy in huge lots.
4) Price soars. And when a penny stock soars, such phenomenon will receive market attention. It will appear in categories like "highest volume for penny stock" or "biggest gain in 1 day penny stock". So now, the non-subscribers and neutral market participants suddenly focus on this penny stock.
5) The next market day, the neutral market participants start buying too. This pushes the price further. Now the first third-party member who compensated the guru to blast the newsletter could be selling off his positions gradually to avoid spiking the market's price and volume; or he/she could just sell off everything at once. If the former choice was made, usually the market will last a few more days; but if it's the latter choice, the market will drop drastically and this could spark a panic-selling.
6) Usually when there isn't much demand and buying, the price will start to stall. Those whom own the share will start selling, and panic-selling usually ensues. Next thing you know, the stock price fell to new lows.
So who's the winner? Obviously the third-party. He could have bought his penny stocks at $0.50 a share and bought 100,000 of it. And later sell it off at $0.90, earning a profit of $40K (before commission, fees, and capital tax).
I knew what was going on and I actually started an online trading account with eTrade. I bought $3K worth of penny stocks when a guru announce the stock. I remember selling it when the penny stock rose by $0.15 or so. I made about $500-600. Forgotten. I tried to do the same thing for the next trade but lost $1K because it went unexpectedly wrong. The market didn't receive as much hype as anticipated. And everyone sold their positions off within the first hour of the market opening. I didn't react quick and I was stuck trying to sell my positions. Example: I tried to limit-sell my positions at $0.80, but the buyers only bid for $0.78. I changed my order type to market order (which means sell whatever the bid is asking), but the volume was so low I couldn't sell all my positions. It dragged on for several hours and I lost $1K because of that.
Yeap, that was my newbie times in trading. After that I closed my account and traded Spread Betting (CFDs). I couldn't control my emotions and discipline and lost about $5K. I made stupid mistakes too like I buy Microsoft (MSFT) stocks instead of Abbott.
My total lost for my assumptions, lack of discipline and emotions, and knowledge cost me $10K+ in total.
I stopped trading for about 2 years after that.
Recently started again, but this time I trade Options and the market. Doing well this time though.
Anyway, getting out of topic here. What I'm trying to say is... you can do it but the SEC is watching. Unless if you can do it through the loopholes. Notice how financial analyst always tell you when to "buy" a particular stock, but never tell you when to sell it exactly. Even if it does, it is at the wrong time. And who knows if the financial analyst is already holding stocks beforehand or is reporting for the sake of a third-party?
... as another member stated earlier in this thread ... this is the kind of stuff i like seeing on BHW 
