The world of penny stocks is strange indeed; full of scammers, conspiracy theories, shell companies, and frauds. It's not that strange to see companies you've never heard of suddenly soar by hundreds or thousands of percentage points just because some pumpers start working the Yahoo! message boards. In many cases, the company insiders are either in on it, or at least passive as it happens, all the while selling their shares at suddenly inflated prices. In fact, some of the traders I worked with called them balloons: They come out of nowhere, swell up, pop, and go away into oblivion.

And here we have the strange case of CTIIndustries (NASDAQ:CTIB), a tiny little company whose stock has soared from under $2 a share and whose volume has swelled to ridiculous levels. Interestingly enough, a big part of the company's business happens to be balloons -- making latex and metalized balloons like the ones you see at gift shops or florists.

What seems to have set off the craze was an announcement that CTI Industries was introducing a new product line of vacuum food-storage bags that will work with all major sealing machines and sell for half the price of similar products. Perhaps some speculators misunderstood the company's press release and confused the $130 million total market size as some sort of projection or potential sales figure for this little company.

Whatever the case, things went crazy. This is a company with only about 2 million shares outstanding, and about 60% of those are held by insiders. That means the float of tradable shares is only about 600,000 or so, and yet the stock has traded nearly 7 million shares so far today; in other words, the entire tradable equity base of the stock has turned over more than 10 times in a single day.

I actually feel sorry for CTI Industries' management: It seems to be a little mystified by this incredible over-reaction. So, I don't think this is any sort of internally driven pump-and-dump scam. In fact, looking over the company's press releases and filings, management seems to be straightforward, non-promotional, and focused on trying to run and grow the company.

But this is what happens with ticker spamming. Day traders with varying degrees of scruples have pumped this poor company tirelessly across dozens of Yahoo! message boards (it may be more than that, too; I simply got tired of looking after dozens). I'm hoping this is all just an exercise in the Greater Fool theory (not affiliated with The Motley Fool) and that the people buying and selling are just hoping to suck in unwitting dupes. I'd hate to think that real investors are actually trying to make real investments here because they've gotten sucked in by some day trader's hype.

Whatever the case, I wish the company well: Management didn't ask for this and it doesn't deserve it. And what's more, this sort of frenetic activity does no real good for patient shareholders, other than perhaps giving them a chance to sell at a ridiculously high price before the day traders tire of this plaything and move on to the next victim.

For more on penny stocks and scams:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).