Penny Stocks - tag category postings

I love penny stocks.  But it seems for whatever reason I have completely neglected this group of stocks over the past several months.  I have not completely neglected penny stocks in the sense that I have been dabbling in the more mainstream penny stocks between $1 and $5 on both the Nasdaq Composite index and the New York Stock exchange.

Given the huge market surge since March 6, of 2009 these days it is becoming harder and harder to find 1$ to $5 nasdaq or nyse stocks that are ripe for a nice move.

Of course the recent exception to the rule was ABK Ambac Financial Group, Inc. Ambac had an absolutely outstanding rally from the depths of the .60 cent range all the way up to a high of $3 and change that occurred through multiple gaps up.

The nice thing about ABK is that you have a very liquid stock and generally very high volatility.  The downside is that you have the potential for this stock to go bankrupt at any time.  I have been in stocks before that had a ‘possible bankruptcy’ press release and let me tell you it is not fun at all.  So ABK is probably best suited for day trading at this point to avoid one of those end of day or pre market PRs.

(more…)

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!