Guard Dog Inc., a penny stock which trades on the pink sheets may be setting up for a breakout later this year.  I cannot tell you that this is the perfect setup or that it has aspects that make it look like a potential blockbuster trade, but at least for the moment this penny stock looks like it has some good things going for it. Lets look at the chart shall we?

There are a couple things that catch my eye on the GRDO penny stock chart.  For starters we see that GRDO had an initial rally way back from the lows in January 2009. This was a pretty decent rally with pretty good volume and showed us the first sign that GRDO is a stock that is capable of getting a rally going showing a decent sign of strength.

After that GRDO went into a long sell off until the mid May time frame, but significantly it was NOT able to break the initial lows set way back in January of 2009.  So basically we can call this a successful retest or double bottom of sorts.  This is a simple point but still quite a significant one since the stock has shown us that it still has some gusto left to make a new attempt at the old highs.  If we were dealing with a dead stock, then GRDO would have fallen below support on the retest and then just kept flat lining in a slow spiral of death.

But that did not happen.

Instead we find ourselves with a new rally now with respectable volume. The classic definition of an uptrend.  The rally, while somewhat choppy has taken us into previous resistance, but still has been keeping support on the uptrendline (drawn in white).

One of the greatest secrets that I have learned about stock price movements whether they are penny stocks or big cap stocks or forex pairs or commodity futures is this. When a stock fails to take out the previous lows, then it will in most cases turn around in the other direction and try to take out the previous highs.  Think of it like a tiger in a cage at the zoo. He cant get out from the right side of the cage, so he turns around and paces back to the other side of the cage and tries to get out there. If he can’t do that then he will turn around again and try to get out from the right side of the cage again. Maybe this is not the best analogy, but you get the point.

PRICE has a life of its own and will act like any other natural force, even in the penny stock marketplace.

So GRDO did the price test of previous support and now is oscillating back up to the top of the range, or at least one would hope so.  That scenario is only valid as long as GRDO is able to hold the short term white up trend line. That remains to be seen, but so far at least it looks constructive.

Incidentally this entire price chart pattern structure that you see in the chart above is at least SOMEWHAT similar to the price pattern structure that EESO had before it shot up to .05 from sub penny range. I am not saying that GRDO is going to do the same thing as EESO, but I can tell you that if GRDO keeps this uptrend going and then gets above that top range resistance level of .004 to .005 range, it could set up a very big move up maybe similar to what EESO did, but that sort of speculation is way too early to do right now.

For now lets see how this minor uptrend holds, or not.

Inca Designs is one penny stock that has had an extraordinary run. I have been watching it for over a month now.  Unfortunately I was not able to catch it in time for the breakout that it recently did. I really thought that IDGI would consolidate sideways for a longer while.

Anyway, the price chart of IDGI is still interesting. But it does have a few challenges ahead that must be meet in order for the bullish case to stay intact. The funny thing about penny stocks is despite the fact that they are so cheap, they still for the most part obey the rules of technical analysis and price and volume relationships.

So what I see right now with Inca Designs is the first blockbuster move from the lows of .0001 area to the red dotted line that marks the .007 level.  That was a big move but then IDGI went into a sideways trading range building cause for the next move. It was not able to break out of the trading range until about 3 months later.  The breakout looks valid in terms of the nice 3 wide price bars, but the volume on the breakout is a bit of a concern to me at this point.  We did under 10 million shares on the breakout.  If you compare that to some of the previous price swings in either March or April you can see just by eyeing it that we are really lacking suitable breakout volume. What you want to see is volume on a breakout that is at least equal to or greater than previous swing volumes.

The other thing to always watch for on breakouts from this type of pattern is a retest of the breakout area.  That is about as common as motherhood and apple pie.  So far we can see that IDGI has fit the bill in that aspect and has now come back down to retest the breakout area and it has been on very light volume which is a good sign.

So it is critical in my opinion that we hold above .007 here in order for IDGI to maintain its up trending ways.  It is quite possible after this retest that we will bounce back up to the .015 area again and then start building another long sideways trading range similar to what happened in March through May.

Aside from the light volume breakout, IDGI is a pretty well behaving penny stock which a lot of the time is a rare thing.  Finding a very well behaved penny stock is really tough these days.

I think I am going to start a new trend here and start to rate the penny stocks that I profile here with a numbering system. 1 will define the absolute most perfect penny stock setup that has ever existed in the history of manking. And 10 will define the absolute worst penny stock setup.  Obviously 5 is going to be right in the middle and make it a 50/50 type setup. So I am going to rate IDGI a ‘3’ right now and think we have a good shot at a testing move back up to .015 which would be a 100% move.

Unico Mining is an OTC BB penny stock that in late May had quite a substantial rally. It was a very powerful rally and I would be so bold as to call that rally a huge sign of strength.  That is what price the nature of the price movement is telling me and it cannot be ignored.

On the popular message boards there is some talk about how this company is a total scam and that the management has time and time again ‘duped’ investors with a dog and pony show only to come up empty with any real results. According to these burned investors, Unico goes through this cycle of pumping up a stock maybe doing some insider buying and then not delivering anything of substantial value in the way of gold production or real concrete progress on their deer trail mine.

If I had a penny for every time I heard the story about how such and such penny stock is a scam, then I would be a very …… (you fill in the blank).

Look, I just do not know if UNCO is just another penny gold mining company that is big on promises but short on results.  That is, I do not know from the fundamental side if that is the case.

But what I do know from the UNCO charting side is that right now we have a fairly good scenario whereby the price of UNCO is at a key decision point and traders and investors have to decide if we have the real deal here or just smoke and mirrors.

The chart is the only thing that matters to me here. I cannot worry about all the other gossip about whether or not they are doing legit business practices and whether or not they will start producing gold in July 2009.

The price chart as you can see in the chart above is at a key juncture and I am going to be watching it very closely tomorrow morning.

If UNCO by the end of the day tomorrow or the other two days of this week is able to get a closing price above that white down trend line shown in the chart above then it could trigger an elliott wave 3 up or new rally in this stock.

On the other hand, if UNCO is not able to achieve that and breaks below .015, then it would invalidate the bullish case, at least temporarily (it could be a false downside shakeout) and open the door to more weakness in price.

So lets let the price decide here what the verdict is. I will be watching this one closely tomorrow and the rest of this week to see if we have any potential here.

I have been trading penny stocks for a number of years now and quite a few sub penny stocks as well. So the question comes up many times, “ How on earth do you spot big penny stock moves BEFORE they actually happen? The hardest part of trading is trying to catch big moves before they happen and then go along for the ride. The other hard part is staying on for the ride until its maturity instead of jumping out too early. Now don’t get me wrong, there is absolutely nothing wrong with taking a profit in penny stock land, but in this business it certainly does not hurt to maximize profits considering how difficult it is to keep them over the long term.

If we look at the chart of EESO enzyme Environmental Solutions we can clearly see that way back in April of 2008 there was a huge move that saw EESO skyrocket. Then this sub penny stock went into a long selloff that eventually bottomed in December of 2008. The reason why I brought up the move that occurred in April of 2008 is that I usually like to see penny stocks already show me based on their past history that they are able to move. It is great to see a previous sign of strength in a penny stock because it shows you what it is capable off and that it might do it again. Plus it gives you a frame of reference with which to gauge possible future action.

Anyway after this long sell off from that high we see that the EESO penny stock based out for over 6 months! These basing periods are extremely important in penny stocks and they can reveal all sorts of valuable clues for future price action!!! This is a very important point and is worth repeating many times. The more analysis you do in the basing out period the more you stand a chance of identifying a real winner as opposed to a complete dud.

The clever observer would have studied this basing pattern on a log chart and noticed that there was accumulation going on. More importantly one can identify a very valuable price chart pattern on this sub penny stock. A head and shoulders bottom formation! You can clearly see this pattern as a left shoulder, then a head in the middle and then the right shoulder. The neckline has an upward slope to it which gives it an extra bullish indication.

As price began to advance above the neckline you could see the increasing volume and then the breakout volume. The pattern was then confirmed and thereafter we say an absolutely HUGE move!

I was not fortunate enough to have gotten any of this penny stock EESO before the big move. To those that did, congrats. This was a superb play and had some outstanding signals before the move. It is crucial to look at penny stocks on log based charts other wise you would not have been able to identify the head and shoulders bottom formation.

But what about holding on for the duration of the breakout? The clue that you need to hold for a while on the breakout was the LENGTH of the head and shoulders bottom formation. We had 6 months of sideways CAUSE. That kind of cause is what makes for an extended breakout type run. So we had some perfect ingredients this penny stock.

Now if you see a similar pattern forming like the one above, PLEASE DO let me know about it! I will examine it closely and see if I give it a green light!

SRSR Sarissa Resources trades on the pinksheets and in my honest opinion is one of the most bullish price charts for a penny stock that I have seen in a long time.

This update and posting is extremely timely as well.  I have spent a lot of time studying the stock price chart of SRSR on all 3 major time frames and have come to the conclusion that SRSR is poised for a very big move, perhaps over the course of the next 10 to 15 trading days.

SRSR currently trades just over a penny at .0135 as of this writing and volume is starting to come into it heavy in recent days making a third approach of the very significant .015 resistance line.

I believe on this 3rd attempt that SRSR will be successful in breaking the .015 level.  It is a stock traders secret that ‘usually’ on the third attempt of hitting a trendline or resistance line, a stock is successful in overcoming it.

My price target on SRSR is in the range of .10 to .40 cents, possible higher. The time it will take to get there is unknown at this time. But SRSR has a history of sprinting to a big price target and then consolidating for a long time.

SRSR is a beautiful combination of a penny stock that has a superb fundamental story and an equally beautiful technical story.

The technical story (always my favorite preferred type of story) is that SRSR has built a sideways consolidation of 4+ months long into a symmetrical triangle that has held its ground when most other penny stocks do full 100% retracements. When a penny stock holds support after its first major spike off a bear market low, it gets my attention big time.

Anyway, here is a quick chart I drew up that shows a little bit of what is developing with SRSR. It has a huge inverse head and shoulders chart with each shoulder approximately equal in length. This is an indication to me that SRSR is just about ready for prime time.

As far as the fundamental story, there is a very excellent summary of the fundamental story right here in pdf format. I highly recommend that you read it.

There are a bunch of other technical factors that make this a great play.

SRSR should be on high alert right now.

Watch for a break of .015 for the wheels to really set in motion.

RVGD has done really well since the previous post on this stock. It is quite amazing actually that it played out so predictably.

In my previous post I talked about how it needed to rally real strong back to .0034 level to give it a good shot at making a breakout type run like it had in the past. 

RVGD did exactly what I asked and surged with big volume since then all the way to an intra day high of .017

The .017 price gave an RSI reading very near the 80 range which was clearly an overbought level on the daily charts. By the way, RSI in my past experience is a great tool to use to help determine exit points and maximize profit.  Anything between 70 and 90 is a good excuse to take profits.

This entire run began quite early and was motivated by a pretty significant press release about a large revenue generating contract which came out the day before the price peak day.

So this was definitely a good setup. Does it have more to go? I really can’t say for sure.  It is possible that RVGD will not build a symmetrical triangle pattern and try another run at .03, but for now it is clear that a lot of energy has been ‘used up’ from this 6 day rally.

From the .0035 level when we first started talking about this penny stock to the .017 intra day high, that equates to a 385 percent increase.  Not a bad return at all, and once again proves the point of the amazing returns possible with penny stocks.  But of course I would be remiss if I did not also mention the possibilities for huge losses as well.

Timing is definitely priority one in the penny stock marketplace!

A quick update on RVGD.  I mentioned in my other post that in order for RVGD to be a good breakout candidate, it really needed to make a strong rally back up to .0035 into the close.  Well it did not quite do it in one day.  Instead it took two, and for now it does still look quite promising for a breakout.

It is possible we could see a gap up tomorrow and then news on Monday of next week.  If we do start to get a strong breakout, I think then we have to pay attention to the downside resistance, of which it has plenty.

I will do one more update on Revenge Designs, so it will be interesting to see how it turns out.  It seems like a high probability setup, not perfect, but not too bad either.

I currently see downside resistance at about .015

Revenge Designs is just one of a few sub penny plays that are hot right now.  CYOS also had a big spike on Thursday and looks promising for Friday.

For the most part the penny market still seems alive and well, even with the huge broad market correction we have seen in recent weeks.

I have to be honest and tell you that I really wonder how much longer the penny stock boom cycle will last.  Let us keep in mind that the broad market has been charging higher since 2003.  The penny market has been booming for quite some time as well. So if the broad market goes into a really severe bear market, it does bring up the question if the penny stock market will be crushed as well.  That is not to say there will not always be a few good opportunities in the penny market, there always are, but perhaps the frequency of them might dry up a bit if the broad market goes into a severe bear market.

Anyway, just something to keep in mind considering how long both the broad market and penny market has been to us!

Ok peace. That’s all for now. Keep an eye on RVGD.

I was watching Revenge Designs trading today because it seemed to have a nice setup and a possible break out from .0035 resistance.  The chart seemed to hold a lot of promise because in past 2007, RVGD had two previous huge spikes so it has already shown that it has the real ability to get a good rally going.

Also notable is the huge surge in volume during the last 30 days and that happening under the longer term resistance line of .0035.  I usually like to see big volume under a longer term resistance line because in some cases it supports the idea that pressure is building up under there and will make the breakout that much better.

Anyway, as far as today’s action goes, it was extremely volatile for RVGD.  Make no mistake, volatility in the penny stock markets is pretty much a guarantee, but occasionally you even see it ramped up to a much higher degree than expected.  That was definitely the case today.

RVGD made a minor surge today to test the previous near term resistance high of .0034 during the first half of the trading day.  But almost immediately upon hitting that level a massive sell off ensued sending RVGD down very hard to an intra day low of .0015.  A few seconds after hitting .0015 RVGD rocketed higher like it had just touched it’s toes to a bed of hot coals.  The reaction rally send it back up to about .0027 and then we saw it drift down into the close to settle at around .0022.

Can RVGD still make a breakout above .0034 this week ?

That is the ultimate question, and the answer depends a lot on whether or not RVGD can pull a rabbit out of the hat and again find a way to rally and breakout higher similar to the way it did in November 2007, the previous huge spike higher.

If you look closely at the chart you can see that right before the huge November rally higher there was a very severe shakeout that slammed price right down and retraced almost all of the previous 5 days. Was today’s action a repeat setup of what happened in November 2007? We sold off very hard and recovered a good portion of the losses today.  The price action does look very similar to the setup in November.

The bottom line is that if the scenario is going to play out again, then I would say we need to see within the next couple of days a resurgence back to .003 and then quick rally higher.  If anything less than that happens, RVGD may be dead money for a a good while longer.