Broke Out Inc (OTCMKTS:BRKO) Squeezes The Shorts

Broke Out Inc (OTCMKTS:BRKO) became one of the most talked about names among penny stock investors after surging over $10 at one point on the back of an epic short squeeze. Perhaps we should say it's an "Elite" stock squeeze since it was orchestrated by the Elite Penny Stock Group. We were the first ones to alert investors that Broke Out Inc was Elite's New Pick.For those that are not familiar with Elite, they are the most powerful newsletter group on the OTC markets. Their websites include finestpennystocks.com, smartstockchoices.com, smartstockwinners.com, BestAmericanStocks.com, and many others. What makes Elite so powerful is that they have a massive database of names and followers. They even have other newsletters following their picks and then trying to pass off Elite picks as their own. Elite will blast their list several times a day trying to get as many buyers into their stocks as possible. We explained last week what was happening with BRKO before the short squeeze happened.

shorts are trying to position themselves for when the dump happens. While the money will be made on the short side, this is a risky gamble. We watch the volume on BRKO and it seems to us that goal is to trap the shorts. Many times when a stock goes up, it’s because shorts are forced to cover and buy back they stock they borrowed. We think this is the main reason why the stock has gone to $3.50 today.

This is indeed what happened. We wondered why BRKO's volume on the first day of trading was lighter than previous Elite picks. One thought we had was that maybe Elite was not as powerful as before after burning so many investors on their last picks. Their last pick was Cloudweb Inc (OTCMKTS:CLOW), which we had warned our subscribers about and that Elite was looking for bagholders. Prior to CLOW, Elite promoted AgriEuro Corp (OTCMKTS:EURI) and America Resources Exploration (OTCMKTS:AREN). Both started at pennies and then exploded. EURI ran as high as $2.09 and AREN hit $1.30. However, both came crashing down after Elite stopped promoting both names and they got hit with the dreaded skull and crossbones from OTC markets, which BRKO has been hit with now as well.Helping to trap the shorts in BRKO was two hit pieces on Seeking Alpha from short seller The Street Sweeper. They wrote one article on March 11 and followed that up with another on March 14. While we agree with The Street Sweeper's reporting, all their articles allowed to happen was for more shorts to pile in on BRKO. Elite was then able to trap all those shorts and orchestrate a perfectly executed short squeeze. The Street Sweeper played into Elite's hands and lead many sheep to slaughter. What we witnessed was market manipulation as an art form and unsuspecting investors that went short got hurt.Many can argue that fundamentals matter, but they don't matter in manipulated markets. We advised investors last week:

We don’t recommend shorting while the Elite emails are still going out. When they shut down their servers, that’s the time to go short.

It's a tough call to say what will happen next with BRKO. For investors that were lucky enough to go long off the promo emails, we recommending selling shares immediately. Book profits and move to the sidelines. As far as shorting goes, the pump emails are still going out. Therefore, we could see another short squeeze sending shares higher. Overall, investors should proceed with caution and don’t be left holding the bag! We will be updating Insider Financial as soon as we know more. For continuing coverage on BRKO and our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in BRKO and have not been compensated for this article.