Penny Stock Marketplace

Ever wonder what day is best to trade? Many traders like to jump in on Monday after spending the weekend researching new stocks. Others tend to stay away from Fridays since holding over the weekend could be risky. Well, take a look at the chart directly below. 

This chart represents the historical annualized percent change in price percent for the S&P for a sixteen year period (1962-1978). While this data seems rather dated and insignificant, I decided to compile my own data to see if I could draw any noteworthy comparisons. Amazingly, the standout day appears to be Wednesday even after all these years. See the two charts below. One represents the NYSE % cummulative gain or loss for each day of the week from May 2007 to February 2008.  The other chart  is for the NASDAQ during the same time period.

Although the most recent Wednesdays have not been that impressive, the historical evidence is overwhelming. So, what is the best trading day?  I’ll go with Tuesday…just before the close!

I recently asked Quazimoto to show me some of the steadiest, higher priced microcaps over the last few months. Some of the parameters included an average daily volume of over 1 million shares, and an upward price trend over the last 180 trading days. Not surprisingly, three of the six stocks selected are in the energy sector.  Maybe the money spent on filling your gas tank can be replenished by buying and holding a few of these strong performers. Here’s the short list:

Quantum Fuel Systems, QTWW
Field Point Petroleum, FPP
Silicon Image, SIMG
Adolor Corp, ADLR
Tengasco Inc, TGC
Gasco Energy, GSX

While past performance does not guarantee future gains, several of these stocks appear to have more room for ‘improvement’. Buying the dips on stocks with these types of chart patterns can be as easy as picking that low hanging fruit. Although not a microcap or a penny stock, I’ve bought and sold Potash Corporation of Saskatchewan Inc, (Stock Symbol: POT) four times over the last several months and recording gains every time. It just goes to show that what goes up can continue to go up. After trading the sub-pennies for a while, these steady stocks allow you to breathe easy and reap the benefits of consistent performance.

 Cyclone Power Technologies (Stock Symbol: CYPW) has been in the news recently due to this impressive little engine that burns clean and cleans the surrounding environment as it works.  Recent large gains including two nice legs up make this one to watch but it just falls short of being considered a watch list candidate.  Quazimoto said he could go either way with this but will err to the side of caution due to slightly weak volume.  Wow! Quazimoto is getting strict.  Oh, well. The Quaz-man does have better stock picking record than me but once in a while you have to chase the run up…right? Currently trading at .285, this one rose over 500% in a little over two weeks.  If it finds a new base and hold it’s volume, there might be some watchlist action here.  

Here’s some recent news…

Named Popular Science Invention of the Year
POMPANO BEACH, FL., May 22, 2008. Cyclone Power Technologies Inc. (Pink Sheets: CYPW) announced today that Popular Science magazine named the clean, green Cyclone Engine as a 2008 Invention of the Year.
The Cyclone Engine was one of ten product inventions to be honored in Popular Science’s second annual Invention Awards. The announcement was made in the magazine’s June 2008 edition.
The widely-read publication highlighted many of the benefits of the Cyclone Engine, including its positive environmental impact and cost efficiency as compared to internal combustion engines. Unlike today’s gas or diesel burning engines, the Cyclone Engine can run on any fuel including pure biodiesel or ethanol, and emits far less pollutants, irritating particles and greenhouse gases into the air. Also, because of its unique heat regenerative design, the Cyclone Engine is able to achieve higher thermal efficiency which leads to less fuel consumption and lower costs of operation. Cyclone has packaged all this in a compact, lightweight and powerful engine.

It’s that time again to off-load some of the slackers from the watchlist.  Both EUGS and IBCIQ lack the necessary volume and price direction needed to be included on the Quazi-ticker.
 
On the positive side, EUGS would have risen 24% after only 3 days. If you held it until now, you would have cashed out with a 10% gain.

IBCIQ, although still potentially profitable in the near term, has been flat-lining for too long.  After five days, an 11% gain would have been had if you played your cards right.  Or if held until now, you would have to take the 22% loss.

With some of the triple digit gains so far, these type of minor losses are worth the gamble. Best to free up the trading cash for something better.  GETG is a poster child for the triple digit gains.  After eight days on the watchlist, this stock has risen more than 139%!  Give up a little, take back alot.  Small losses are worth the monster reward.

There is nothing more exciting than seeing price action and volume come together.  Take a look at the 2 month chart of Latitude Power Boats, (Stock Symbol: LTDI)  This type of action reminds me of the stock pick we made back on April 6th with RGRP which rose 147% within two weeks!  Of course, at the same time, we were looking at IBCIQ which has been flat-lining ever since.

This one is ticker-worthy even though Quazimoto is sleeping through the weekend.  The company makes those super-fast drug smuggling boat chasers and has a government contract or two.  A penny for your thoughts?  Trading at less than .002, a penny would seal the deal.  Click here to view their fancy website.  Makes me want to grab the scuba gear and head to Margaritaville.  

On a non-penny stock relate note, here is an ETF cheat sheet from the folks at Bespoke.  ETFs offer public investors an undivided interest in a pool of securities and other assets and thus are similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on a securities exchange through a broker-dealer.  If you feel the need to step away from trading individual stocks, ETF’s are a great alternative.

Click on the table below and check out the wide variety of options available.  This table also includes a few inverse ETF’s that allow you to short the market. 

Currently, Quazimoto is keeping an eye on some potential huge gainers but he most likely will off-load some of the current picks to make room on the ticker.

Diamonds can be just as irresistable as predictable chart patterns.  So when you have a stock chart that relates to diamonds it’d got to be good, right?  Well, we’ll let the chart of Global Diamond Exchange (Stock Symbol: GBDX) do the talking.  This one got Quazimoto’s attention because it is holding steady even after huge intraday swings. 

Here’s a little info from the website:
 
Global Diamond Exchange originally opened their office on 2 West 46th street in the heart of the ‘New York’s Diamond District’. After several years of operation at their New York office the company decided to shut down the operation due to low pricing and soft demand in North America. The company concentrated its efforts on exporting cut diamonds from the Russia Federation and European locations. The new company has reopened its sales offices in the original building ready to take on the increased demand for fine quality diamonds. Global Diamond has served the needs of clients around the world by providing diamonds of exquisite quality and workmanship. Russian diamond cutters are considered the most skilled craftsman in the world. Global has recently expanded its exporting to include rough diamonds from Russia. Global has contracts with Russian cutters to cut and export these exquisite brilliants from Russia.

We provide website “blurbs” like this because some traders actual like to know what they are trading.  To me, charts sell the stock.  Quazi agrees.  A little more volume would have been nice but we will “watchlist” this one. 

Cubic zirconia or the real thing?  You decide.

I’m not in favor of chasing stocks that have risen 233% in one day but it may be worthwhile to watch the momentum of Actionview International Inc. (Stock Symbol: AVWI). Quazimoto is not in agreement because I actually had to remove one critical parameter in order to find this high flyer. A stock that makes new highs over a period of time is a Quazi prerequisite but I took this parameter out of the equation and AVWI popped up.  Ride this higher or sit tight and watch the action.  The massive volume is what caught my attention.  This stock, like many, looks highly manipulated when pulling it back over a year or so.  Be that as it may, nothing ventured, nothing gained. Quazi likes better set ups so he won’t even allow this one in the ticker.

Diversification is one of the few things a traders has complete control over that can directly affect his portfolio.  Man cannot live by penny stocks alone.  In fact, when the markets turn south, the first stocks in the portfolio that most traders toss overboard are the riskiest ones.  I tend to do the opposite and start looking for penny stocks under accumulation.  When the market is flat lining or crashing, 80% of NYSE, AMEX, and NASDAQ stocks follow suit and head lower.  Penny stocks do not generally follow the market trend.  Momentum creates it’s own dynamic.  At the very least, it keeps me from getting bored.

Of course, when the market is trending up, there is no better place to be than in the IBD 100.  The Investor’s Business Daily lists it’s top 100 stocks every Monday. At times, I trade nothing else but stocks on this list.  During the second half of 2007, companies such as Baidu, (Stock Symbol: BIDU); Intuitive Surgical, (Stock Symbol: ISRG); Research in Motion (Stock Symbol: RIMM); Priceline, (Stock Symbol: PCLN);,and Suntech Power Holdings, (Stock Symbol: STP) all topped the IBD 100.  It is no wonder why.  Since June, the stock price of each of the companies listed above increased 180%, 135%, 125%, 125%, and 140% respectively.  Not too shabby for non-pennies.

Remember that I said “when the market is trending up”.  If you had held these stocks during the first few months of 2008 you would have been in for a penny stock type ride…BIDU -40%, ISRG -50%, RIMM -40%, PCLN -25%, STP -40%.  Many of these stocks have recovered somewhat but it just goes to show that these high flyers can crash with the best of them.

A comparison between stocks of the IBD 100 and the S&P 500 between 5/2/03 and 12/20/07 yields a gain of 245.8% for the IBD 100 versus 57% for the S&P.  This is more than just lucky stock picking.

Whether playing the pennies, or the best of the IBD 100, diversification and timing of your trades are essential to trading capital preservation.  Opportunities for easy profit, or low hanging fruit as some would say, are anywhere and everywhere between sub-penny and Google-penny.

 Quazimoto believes that what goes up must come down…and then go back up again.  That is why he has added Green Earth Technologies (Stock symbol: GETG) to the watchlist.

According to the company info… “Green Earth Technologies, a consumer goods manufacturer, produces “G”-Branded superior performing TOTALLY GREEN products made entirely from American Grown Base Oils that now puts the power of patent pending nanotechnology (doing more with less) and dehydrogenation into the hands of environmentally concerned consumers everywhere.”

Sounds good. Of course the only green we are interested in is the kind that you stuff your wallet with. This stock has risen dramatically and as the saying goes, “He who hesitates gets a better price” as a little more profit taking may be in order. Quazi, on the other hand, thinks this may be a quick short term play. Either way, watch the price action and trade accordingly.