Penny Stocks

Today the volume shrunk once again on the penny stock Liberty Star Uranium & Metals Corp.  Today does not show any indication of upside reversal.  As indicated in previous posts penny stocks penny stocks dot come expects LBSR to drift down for a retest after having previously filled its opening gap which we predicted earlier.

So today looks like a resting point and half way move pause before the rest of the half way move is completed in the days ahead.  The uptrend line looks better defined now and is likely a target area for support to come in.  It looks like .07 to .08 cents may be the upcoming low point.  It will be very important for this level to hold in the days ahead to keep the trading swing rang intact.

We could see as low as .062 again, but I would rather see Liberty Star Uranium & Metals Corp hold ground at .07 to .08 for a more bullish picture to develop.  Still, as long as the up trend line holds then LBSR should be on fertile ground for a new move higher after that.

We also indicated in previous posts that volatility would decline and that volume would also shrink which is exactly what is happening.

There is still the outside concern that the super high gap down very high volume down day that started this correction was too severe and may have permanently damaged the uptrend.  This is still unknown at this time.  KAT Exploration had a similar very severe high volume down day and that turned out to eventually destroy the uptrend.

But again, I don’t want to be too premature with LBSR. I still expect support at .07 to .08 to hold and then another move higher after that.  I need the price chart to fill itself out more before I can make a better determination whether the damage done on 9/2/2010 was enough to completely destroy the uptrend.  For now I do not believe it was, but it is just something to keep in mind as the trading range develops.

With penny stocks one can never take anything for granted.  The unpredictable is pretty much a given and one has to remain on guard for both bullish and bearish possibilities at any time.

I previous gave Viking Systems Inc. VKNG a penny stocks penny stocks rating of 1, our highest and most favorable rating.  VKNG is not the typical penny stock in that it trades in the .30 to .40 cent range, but does it really matter what price a penny stock is if the longer term price chart setup still says there are potentially huge gains to be had ?

To me it makes no difference.  Some would probably only like to identify .005 to .10 cent penny stocks trading on the pink sheets or OTC BB.  Surely there are plenty of setups in that space with LBSR being a recent outstanding example of one.

But there are also a huge number of low priced stocks that START from the .20 cent range that can still do amazing upside runs especially if the longer term chart is very favorable.  VKNG is an OTC BB stock that actually has the potential to make some serious money if management can execute and position their 3D HD minimally invasive surgical system to eager buyers.  The price range for their product is near $100,000 each and so you can see how just a few sales can start to add to the bottom line.  The product launch is early October 2010, and the then the last quarter of this year.  Basically this company is transitioning from a development stage level to ‘real company’ level if they line their ducks up correctly.

I feel strongly that the long term penny stock price chart of VKNG is as attractive or even more attractive than the price chart of LBSR.  They are similar in that they both have good bases and large tradeable voids on the left side of the chart.  Stocks that make the biggest runs often times have large tradeable voids on the left side of the chart after having formed long bases.

VKNG today did a huge surge on big volume today. It was a gap opening and a spike high that is confirming the recent uptrend.  I feel that VKNG will trade higher into the end of the year as a longer term position type trade.  I already did a write up over at BestOnlineTrades and you are welcome to read that and see the weekly price chart which looks outstanding to me from a bullish viewpoint.

VKNG is not a good entry right now. I plan to accumulate on any dips in the weeks ahead, but I am unsure at this point whether or not the large opening gap will be filled or not.  I suspect it will in the weeks ahead which would create an ideal entry point.  Buying on a spike high is usually never a good idea.  Usually the stock calms down and settles into a range before the next leg up.

Because VKNG has a low float it tends to trade in the form of spike highs and then extended bases. It is a peculiar trading pattern and takes a little getting used to.

I see potential for VKNG to get above 1.00 range and even into the 3 and 7 dollar range within a 1 to 1.5 year time frame.

LBSR today filled the gap just as I predicted yesterday and also traded down hard into the close creating a bearish piercing candlestick pattern into yesterdays up candle.

The forecast has not really changed since my last post.  We filled the gap as expected and now are indicating price weakness again and should drift down to get some type of test of the crash low near .06 range.

The level that we stop at will be KEY in determining the future strength of LBSR. It will take some patience because volatility is dying down now and price is likely to drift around a bit as it tries to find its way to the lows again.

This is called a trading range and can be discouraging to those who are not prepared for it ahead of time.

Volume dried up significantly today and confirms my stance that the stock is moving into a trading range and a retest.

So far so good, patience is key now as the trading picture plays itself out.  Penny stocks penny stocks has made some very accurate directional calls in LBSR since .03 cents.  Admittedly we picked the top too early but we did catch the final top and the reaction low as well as the reaction up again.

Stay tuned for more LBSR coverage in the days ahead.  LBSR continues to show itself as one of the most interesting penny stocks for 2010.

Liberty Star Resources filled part of its huge down gap today as predicted in yesterday’s post.  It did not fully fill the opening down gap today but came close.  I don’t know if we will fully fill the gap tomorrow or not, we might.  It is a possible scenario for September 8, 2010 (Wednesday’s Trading) that LBSR rallies very early in the day near the open to fully fill the gap, but then by end of day prints a reversal candlestick and either closes down for the day or prints a shooting star or reversal hammer candlestick.

If the above mini scenario happens tomorrow which seems quite plausible, then one would expect LBSR to shift momentum again and start to slide down again for an eventual (not immediate) retest near the .06 to .09 range.  How low it would go on a retest is unknown at this time.

I have to say that today’s strong upwards reaction after the massive sell off is quite encouraging.  Sometimes you will see penny stocks do a lousy dead cat bounce after such a massive drop.  That is the first sure sign of a dead penny stock.  But instead LBSR got large upwards reaction with big and wide price bars showing that demand is still healthy for this stock.

The points I made in my previous post still are basically the same.  That LBSR is likely to trading in a sideways swing trading consolidation range for a month or so, maybe longer.

After a stock suffers severe technical damage, it is extremely unlikely for it to just pick itself up and blast higher vertical again.  The ones who bought at the top still are fearful and want to get out if they get a second chance.. and so you see some supply come into the penny stock.

LBSR continues to be interesting to track and while I do not intend for this penny stock to be the only one I talk about here, I like to focus on what is interesting to me at the moment.

I will cover other penny stocks here in the future, but keep in mind that only penny stocks that I give a rating of ‘1’ are the ones I feel the most confident in.  All other penny stocks that I mention here may be promising but I am not giving them my 100% full vote of confidence.

LBSR went into a high volume correction and is currently in a very high volatility state.  It tested the lower range of support near .06 cents and reversed higher very strongly to close the week out.  This penny stock will now move from a high volatility state to a low volatility state that will likely take several weeks.

We pointed out in our last post on this gold and uranium mining penny stock that we likely topped out because of the one day volume reversal doji.  It looks like our timing was spot on in that regard.

The big heavy volume drop right from the highs is usually not something you want to see.  KATX had a similar very high volume drop from its .25 price point and now it has eventually broken under support and the uptrend has pretty much ended.

I suspect that LBSR will trade higher in the days ahead as it springs back in rubber band like fashion back to the top of the range.  I think it will trade higher in the days ahead to the point where it might even fill that large opening gap down of 2 days ago.  This should cause some supply to come into this penny stock and lead to an eventual reversal down again to create a trading range.

We should be entering some type of trading range for at least 2 to 3 weeks from this point.  The key will be to see how LBSR does its retest of the .0631 level.  After this reaction up I suspect that we will eventually see a retest of the .0631 level to create some type of double bottom.

If this penny stock is strong enough then it will not be able to be pushed all the way down to .0631 and may hold ground slightly above at .065 or slightly higher on the retest..  That will be the first sign that LBSR still has some strength and will continue to build a constructive trading range which may lead to an eventual breakout higher.

They key word in the last paragraph is ‘may’.  LBSR is not in a volatile trading range and it has to work off some of the overbought situation.  This will take some time for the new form to take shape.  Only at a later point in time will it become clear whether or not this penny stock has the juice for another major run higher.

More updates as warranted…

There is an old adage in stock market lore about the bulls, the bears and the pigs.  All three of these types of market participants exist in the market.  Generally speaking it is never wise to be a pig in the market because usually it can lead to giving back hard earned profits.  Pigs hold on too long to a stock or index in the hopes that a stock will keep going straight up on their time line.  When stocks make life time huge moves there always comes a point where heavy profits will want to be taken. 

Heavy profit taking is what we think is about to happen to LBSR after today.  Penny stocks are famous for making enormous persistent moves when all the ingredients are right.  But they are also famous for dropping like a rock when some serious profit taking sets in.

Today we printed a near perfect doji candlestick in Liberty Star Uranium Corp and volume was also half that of yesterday.  But we also did something very significant in that we went above yesterday’s high, and then closed under it today.  This is a sell signal in terms of volume.

There was also a double top in daily RSI today and a class B divergence.  I don’t have a MACD histogram sell signal yet but that may arrive by end of this week or next week sometime.

I am not saying that this is the final top for the penny stock LBSR.  I am just saying that it is time for a serious correction and a long new base building process for any possible new move higher.

I am looking at .12 and .09 as possible correction targets in the days and week ahead.  .09 on this penny stock would represent the 61.8% fibonacci retracement

level.  If LBSR is extremely strong then it will only correct to about .11 or .13.  I think .09 is more probably but we will just have to wait and see how things shake out.

Identifying sell points is tricky in LBSR but I think it is a done deal from today onward.  That is not to say that we cannot still trade marginally higher after today but I still think it will result in a top.

The trading action after today is going to be very interesting as we will see how strong LBSR truly is in terms of buyer support coming in.  As I said I expect it to come in strong, but the speed of the shakeout will determine the strength of the strong hands.  Penny stocks tend to fall faster than they rise which is true for almost any stock out there.

This penny stock has had one of the most amazing runs we have ever seen since we profiled it at .03 cents.  We expect the story will continue to get interesting.  One thing that surprises me is that we have not as of yet seen any news.  It would seem unlikely that news would come out before the 3 day holiday weekend. So maybe LBSR stays afloat 2 more days this week and then finally goes into correction mode early next week. . .

I am being a bit too dramatic with the title of this post, but to a certain degree it is true.  I mentioned in previous posts on KATX that it must must hold .105 support to keep the bullish scenario alive for breakout later in time.

Today KATX chose to bust support and close at .098 on heavy volume.  It violated support which was very significant support.  It turns out that the 6/14/2010 very high volume down swing was a very significant clue (we talked about this before) that damaged the stock’s uptrend beyond repair.

Today’s close under .105 means that now .105 becomes new resistance and KATX may drift lower for months maybe back to very low pennies.  Only a strong close back up inside the range above .115 will get me bullish again and thinking it has another life in it.  This looks very unlikely at this point although it is not entirely impossible.

Penny stocks transition into many different phases one day at a time.  Keep in mind that I do not hold anything against KATX and there is nothing to take personally here.  It is simply a matter of making a judgment of the chart and determining which way the wind blows.  Right now the wind is blowing very bearish for this stock.  Extreme caution is advised.

I suspect that a lot of capital from KATX is being pumped into LBSR as a transfer trade.  LBSR is in a very different stage of its trading cycle however.  It may soon top later this week.

So for now it is time to say goodbye to KATX…  The long sideways trading channel was showing some possible bullish possibilities but it is important to know when to cut loose and run just as with any other stock.

LBSR today blasted higher AGAIN.  Amazing.  This penny stock had printed a double inside day the previous 3 trading sessions which was a clue that another huge move would come in today.

I still do not see clear signs of a sell signal.  But I should say that we are trading right now at the top band of resistance I mentioned in previous posts.  I am going to be SHOCKED if we blast higher and close at .20 cents this week.  I would expect at least some consolidation under the .14 level before LBSR can blast to much higher ground.

The way the stock is trading suggests that news should come out on the last day of August in the morning or afterhours.  And once again I have to stick to my original take that once news comes out it will mark the short term top and beginning of a long sideways consolidation. 

Clearly LBSR is a stock that is in very tight hands, selling pressure is limited.  But at some point everyone is going to want to unload until they get more transparency and visibility of the company direction in the weeks and months ahead.

I am going to keep my comments short today on LBSR.  I feel like we are in the 11th hour on this penny stock and very close to news.  I would advise extreme caution against going long LBSR from this point forward.  Strength should still be presumed, but the finger should be ready to pull the trigger at any time given the current trading dynamics.

Clearly it is very hard to pick a top in a stock that trades as strong as this one.  All we can do is look for clues and forward looking events.  Lets see how things shape up mid week for LBSR.

My apologies for the late post today.  I am a bit busy preparing to head out to the Cape during the end of this week.  I will have more detailed thoughts on both LBSR and KATX along with plenty more penny stocks that come across the radar screen in the days and weeks ahead.  Please bear with me the next few days if posting is somewhat light.

So just a few quick comments on the LBSR and KATX charts today.

LBSR (Liberty Star Uranium Corp) today sold off but once again showed a bottoming demand tail on the candlestick.  This is a short term bullish sign.  However today was also an inside day in that yesterday’s high and low were not tested of taken out.  Volume lightened up today on the decline which is a bullish sign.

The MACD histogram is once again flashing at least a potential sell signal but it is unconfirmed and it will fail as a sell signal if we close above the 8/25 swing high.  However if we close tomorrow (Friday) below the .1022 swing low it will be a confirmed sell signal.  I am also noticing on the intra day chart at least a potential head and shoulders topping formation.  If we close down tomorrow it may begin to form the head and then the neckline would be at .08 which is likely going to be good support.

At the risk of sounding repetitive, I continue to believe that LBSR is trading into news and we would advise caution after news is released as it can tend to act as a strong reason to sell even if the news is extremely positive.

At some point LBSR is going to have to start building sideways cause again.  It has already exceeded the high tight flag formation measured move and is now in the stratosphere.  So key for 8/27/2010 is whether or not LBSR can print a new high AND close at a new high.  If it does that then expect higher prices early next week.  If it closes below the 8/26 low then expect some early weakness next week.

The penny stock KAT Exploration KATX has different dynamics taking place in its penny stock chart, much different than LBSR.  Today KATX did a deep retracement of yesterdays big belt hold candlestick (a big candlestick that shows strong close and strong move right from the get go).  In fact today’s (8/26) deep retracement makes the candlestick pattern look like a potentially bearish piercing pattern (this is when you get a deep retracement into a bullish candlestick the day before that covers 50% or more of the body of the previous candlestick.  The potential bearishness of this pattern will not be confirmed unless we get a close under .115

On the plus side, the deep 8/26 retracement on KATX was on 1 million less shares, a bullish sign.  Still the most important consideration is to try to see the forest for the trees on this penny stock.  I can talk to you about daily price action all day long, but what about the bigger picture on KATX?

The bigger picture involves the 6/1/2010 price peak and the long downward slanting consolidation we have had since then.  The key points are that we have been trading in a consolidation in descending fashion.  This simply means that we have a series of lower tops each time we have tried to rally.   This is a concern because you usually do not want to see lower tops over an extended period because it shows that there is consistent supply coming into a stock (selling).

However, on the plus side we see that .11 has been tested 3 times so far and has consistently held support.  We have had 3 nice upward reactions off of this support line showing demand.

So the battle will eventually be lost or won.  If KATX breaks below .11 and closes below .105 then I have to assume that the sellers won and a new potential bullish scenario is lost.

If KATX on the other hand in the first week or two of September can break above .15 or higher, then we can start to assume that a new bullish phase may begin.

These are the trading dynamics of this penny stock. The battle is either going to be won or lost.  There is no reason to get emotional about it.  It all comes down to supply or demand.  A break below .105 would put us in a situation of saying that we cannot recommend holding onto KATX any longer.  Why? Because that would show a violation of support.

The problem with penny stocks is that when they turn long term bearish they do not make it very obvious.  They tend to die a slow drifting down death.  Those who do not pay attention to the clear signals ahead of time stand to risk riding a penny stock all the way back down to where it began its journey.  I can name you plenty of penny stocks that have suffered this fate.

But at least as of right now I can tell you that no clear major sell signal or new bullish signal has been activated yet.

I should also mention that if the gold price can somehow manage to blast higher to new life time highs, it may help to support the micro cap mining stocks.  My current technical analysis of the gold price suggests that it may in fact do that in September.  Also, September is the seasonally MOST bullish month for mining stocks and precious metals.  So it would seem that the wind can be in the favor of many penny mining stocks.

Still, the levels are clear in KATX and must be respected.  I will have more coverage of LBSR and KATX in the days and weeks ahead as well as more detailed charts and analysis.  We try to provide the best penny stock coverage and the most depth because it matters.

Penny stocks penny stocks dot com aims to try to identify the most bullish penny stock position trading setups.  We search high and low and leave no stone unturned seeking to find those elusive blockbuster penny stock setups… Stay tuned…

KAT Exploration Inc today showed a sign of strength once again and bounced off the very critical .11 cents range showing renewed demand for this gold penny stock.

At this point it looks like KAT Exploration Inc has passed the test of holding key support at .11 cents.  I mentioned before about how important that level was to hold to keep the overall chart structure intact.

The good news now is that if KATX can get a breakout going topside out of this large descending wedge it could lead to a test of the highs near .24 cents and maybe beyond.

The volume ticked up nicely today as well.  The daily MACD histogram looks bullish and the WEEKLY MACD histogram will flash a buy signal if we can get a close above this weeks closing weekly high.  This would be a potentially very important weekly buy signal if it is confirmed next week.

This gold penny stock is a typical well behaving penny stock that has decent liquidity to trade just like regular stocks.  Still, it is important to consider that as of this writing KATX has not actually achieve a topside breakthrough of that red dotted down trend line.  This means that it still has important work to do to prove itself.

But so far so good.  KATX holders should be pleased that this penny stock has been able to hold .11 so far which was definitely not a given in this risky sector.

Pennystocks penny stocks first mentioned KATX way back at around 5 cents.  We also recently mentioned the gold and uranium penny stock LBSR at around 3 cents.  Clearly penny mining stocks are the place to be right now in the overall penny stock sector. . .