Sub Penny Stocks - tag category postings

IDOI is a penny stock that trades on the OTC BB and I wanted to give it a quick mention because the chart structure looks fairly attractive to me.  It was up about 55% today on huge volume.

IDO Security makes a security products for airports, schools, and other venues where forcing people to take their shoes off is too much of an inconvenience.  I did not know this but apparently the complexity of many shoes design, in addition to their thickness prevents normal security scanning techniques to be effective on them.

I really think most people hate taking their shoes off at airports and other locations where there are security zones.  It is just one big hassle, not to mention a little bit embarrassing.

The downside of this penny stock is that the outstanding shares are near 1 billion.  However the chart still does look somewhat promising. Looks like a triple bottom to me and a relatively flat base and now a rally with very strong volume off this base.

It seems a lot of the float is bought up if not all of it already.

A form T was also recently filed indicating that the owner has recently bought a good amount of shares.

So do we have a running penny stock here or not?  Well the volume says so, the long base says so, but we will just have to see.

Given today’s big move I am hard pressed to find another good entry point in IDOI.  Probably the best setup is to wait for the first consolidation to see if it has enough legs to stand on and then maybe find a low risk entry that way.  But chasing a penny stock like this one at the highs is a dangerous game.

But I did just want to mention it for watch list purposes.

I have been watching GRDO for some time now and I suspect that it may be building up to a breakout of sorts.  The chart pattern as of this writing looks constructive to me and there may also actually be a pattern similarity to another stock I had on my watch list with symbol BEHL.  BEHL had a big breakout the last two days and I suspect we may see the same with GRDO. GRDO does have some more work to do price wise.  Perhaps another 2 or 3 weeks will be enough to build a breakout. It could happen sooner and the first indication will be that GRDO price is able to break up above the last 2 weeks trading range.

If you look at the chart to the left which shows GRDO on the top portion of the chart and BEHL on the bottom part of the chart there is a tendency towards a general pattern similarity.

I have drawn the red arrows indicating some of the major general moves on these two penny stocks.  In each case we did see at first a nice rally of about 1 month and a half in duration which then peaked and led to a slow and extended selloff.

But then new demand came in then price was able to rally back to the top of the trading range in BEHL where it eventually led to a big breakout as was seen today.  So in essence what we had in BEHL was a first price attempt at the top of the range and then two more attempts and a final successful breakout.

The pattern in GRDO is similar in the sense that now we are near the top of the range again and trading sideways similar to the way BEHL did just before it broke out.

The overall theme here is that if price fails to take out the previous lows, then it will turn around and attempt to take out the previous highs.  We could be near that stage now with GRDO.

Of course all of this could be invalidated if price does not remain constructive in GRDO the next couple of weeks.

GRDO happens to be in the business of identity theft protection.  Clearly this is a huge potential market and also judging from the success of LifeLock a very profitable one.  LifeLock is basically an insurance company, and I suspect a very cash rich business.  I think lifelock is growing at about 25% per month and does north of 100 million in revenues per year.

So clearly we have a very big opportunity here. It is that kind of ‘pie in the sky’ potential that tends to light a fire under some of these penny stocks sometimes.  Lets see if GRDO can build some more momentum from this new identity theft biz wave.

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.

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!

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.