For those that trade the microcaps and any stock priced higher that $10 per share, knowing the trend of the market can greatly increase your chance of success. Using Quazimoto’s market direction function has proved successful especially when it comes to staying out of deep market retracements. I am currently adding a page to the sight that explains this in more detail, but for now I have added the traffic light in the right sidebar. This traffic light indicates the” long term” trend of the market. Long term meaning several days to a month or two. The red light indicates the best time to stay out or set your stops close; yellow (with red or green) means trade with caution as change to market direction is expected; and green gives the go-ahead to trade with reckless abandon…or at least trading with deeper stops. For the sub-penny and penny traders, market direction is less important. Trading momentum is more important for those stocks.
Hot Stocks on a Cold Day
With the market down over 3% today, I find this an opportune time to search the database of microcaps that have bucked the trend and swam against the current on a day that was “red” all around. Surprisingly, 21.5% of microcaps in the database ended the day with gains. Two worth noting include Ideaedge Inc (Stock Symbol: IDAE) and Gran Tierra Energy Inc (Stock Symbol: GTE). These stocks ended the day with gains of 8.4% and 8.3% respectively. The charts for these stocks are quite different. One looks like it needs a little rest while the other looks like it’s ready to move on up again.The chart below compares the recent six month history of each compared with the NASDAQ which is represented by that flat looking line near the bottom of the chart.
If June has been one of the worst months for the stock market in recent history, these two stocks were not listening.
Chasing a Sleeper
As we have stated before, we are not fans of chasing high flyers but Effective Control Transport (Stock Symbol: EFFC) is worth watching closely. This company makes those devices that help prevent “sleeping at the wheel”.
Alertness and Drowsy Operator Monitoring is emerging as the transportation industries most important technology of this millennium.
ECT has pioneered the development of alertness monitoring technology to ensure the entire transportation industry, land, air and sea, is equipped with the tools necessary to successfully prevent accidents caused by drowsy or inattentive operators.
By partnering with leaders in the transportation industry including manufacturers and governments, ECT will help substantially reduce accidents on our roads, railways, seas and in the air, ultimately saving lives.
This recent price action will keep any trader awake. Watch for new support forming or a continuation of breakout above the last high. Remember that this stock just made a 60% gain today on relatively light volume. We will remove NEWCQ from the watch list since it never held support and replace it with EFFC. Quazimoto agrees that EFFC could run up quickly once again but he refuses to give his stamp of approval. Apparently, Quazi still chases nothing.
When Opportunity Comes Knocking…Hydrogen Hybrid Technologies, Inc.
I received a flyer in the mail a while ago for Hydrogen Hybrid Technologies, Inc., (Stock Symbol: HYHY). Flyers like these are common with penny stocks. Last year, I had received one or two that were pumping platinum. Had I jumped in at the time that I received this information, my investment would have tripled. This goes to show you that money can be made from following the advice of those people that are kind enough to include me in their mailings.
The HYHY brochure contains six pages of pictures and information that would rival any comic book. Read it once and you might become interested enough to check up on this company. Read it twice and you may put in a large limit order before you realize what you have done. These flyers are well produced and well circulated. No doubt that those behind this mailing have reaped a large reward already.
According to the company history page, Hydrogen Fuel Injection Technology is installed as an add-on to diesel and gasoline engines where it significantly reduces a wide variety of emissions while simultaneously reducing fuel consumption, typically up to 30%.
Hydrogen Hybrid Technologies has obtained exclusive worldwide rights to sell Hydrogen Fuel Injection technology to Original Equipment Manufacturers, as well as a non-exclusive right to sell the HFI technology into the worldwide after-market segments.
Take a look at the recent chart for HYHY…
I guess you could challenge anyone who says that nothing goes up in a straight line.
The Penny Stock Marketplace is certainly not promoting this stock in any way. The only thing we promote is making good decisions when confronted with information and a chart that begs the question, “Now what do I do?”
Whether this technology actually works does not really matter. As a trader, capitalizing on the hype and momentum of these high flyers should be your only concern. A successful trader always has a plan. Stick with it and you will come out ahead over the long haul.
Remember these rules:
Don’t chase a runaway stock. You may be kicking yourself for missing a 500% gainer but if this stock has real momentum, you can always get in after the next retracement. Throwing you money at this now may pay off, but before you do, remember the next rule…
Sub-penny, penny, and microcap stocks are for trading. We all know there are exceptions to this rule. Yahoo (Stock Symbol: YHOO) was trading for 77 cents back in 1996 and rose dramatically within a couple of years, but the fact remains that most stocks do not reach those heights…ever. Riding the momentum and taking the profits will allow you to trade another day.
What will I be doing? Sticking with my plan, I will whip out my Fibonacci calculator and wait for a solid 38% or 50% retracement from the top. Only then will I jump aboard the HYHY train.
Watchlist Update 6-19-08
One stock that did not make any move to the upside since we put it on the watchlist was PHYA. Because of this we will take our loss and move on. A 40% loss can be hard to take but when you look at the performance of a couple of Quazimoto’s recent picks, that loss pales by comparison. I am referring to Blue Diamond Venture (Stock Symbol: BLDV). Since our last update BLDV has run up 175%. Cyclone Power Technologies (Stock Symbol: CYPW) has eclipsed that but running up 200% soon after it gained Quazi’s watchlist status. It goes without saying (but I’ll say it anyway)…double digit losses are no match for triple digit gains. Remember that how you trade is just as important as what you trade. Take a little off the table with these huge run-ups.
Quazi has a few more hot stocks in his sights but will wait to pull the trigger and reveal these until the probabilities tilt toward success.
More Metals and Oil Stock Speculation
Quazimoto seems to favor those parabolic type stock charts especially when they involve oil, gas, and mining.
Occasionally he has a ‘green’ bent…see GETG and you will know what I mean. Before we weed out some of the tired stocks from the watchlist, a couple of interesting choices will be added to the watchlist in the short term…
Keep an eye on Goldspring, Inc (Stock Symbol: GSPG). GoldSpring Inc. is a metals mining Company in the production of gold and other precious metals. See the chart below and watch for some action to the upside.
The other stock Quazi has “mined” from the depths is New Century Energy Corp. (Stock Symbol: NCEY). A pennant shaped consolidation may swing the price upward. The hot industry ranking does not hurt either.
Shorting the Market with Inverse Exchange Traded Funds
Although this is the Penny Stock Marketplace, we consider ourselves an equal opportunity blog. I do feel the need to display the 
symbol to warn the die-hard penny pickers that this post is somewhat outside the microcap universe.
Gearing up for a market correction includes placing stop losses, closing out of certain (or uncertain) trades, and taking a little cash off the table. A second look at some of the Proshares Ultra Short ETFs is also worth the effort.
These inverse Exchange Traded Funds can be bought and sold just like any stock and don’t require margin accounts. The only difference here is that an inverse ETF’s share price goes up when the market goes down. Time this right and you will be cheering for the bears while the bulls run for cover. Many of the short ETFs have rather anemic volume but the small list below includes the exceptions:
QID - Ultrashort QQQ
DXD - Ultrashort Dow30
SDS - Ultrashort S&P500
MZZ - Ultrashort MidCap400
and someday when the time is right…
All of these funds provide the opportunity to cash in on the way down at twice the speed of a “run of the mill” index fund. Just remember that when the line on the chart goes up, the market is going down.
I guess Caridee isn’t so dumb after all.
Steady As She Goes
Looking for a consistent microcap?. If you haven’t found this one already, take a look at Deep Down, Inc (Stock symbol: DPDW). The chart says it all. We will see if the trend continues and judging by the steady climb it looks like that may happen. This one may not make you rich over night, but it could be a long term steady addition to your penny portfolio.
According to the website, Deep Down Inc. specializes in the provision of Installation Management, Engineering Services, Support Services, and Storage Management for Subsea Controls, Umbilicals, and Pipeline Industries. Located near Houston, Texas, Deep Down is situated to serve clients in the Gulf of Mexico and Internationally.
I’m sure Quazimoto won’t mind if we put this one into the stock ticker for a while.
Finding Profitable Stocks in a Uncooperative Market
On a day where the bears ruled, it is advantageous to look at those few stocks that increased in price when the majority got crushed. Look below at Friday’s close…Nasdaq down 2.96%
NYSE down 2.72%
AMEX down 2.32%
Microcaps to the Rescue…
I asked Quazimoto to search between stocks that meet the criteria for a micro cap and then compare this to the general market. Interestingly, 10.6% of stocks trading between $10 and $100 across the major markets finished the day with a gain while 26.0% of microcaps finished the day with a gain. Diving a little deeper, the majority of microcaps that fought the tide on Friday traded in the $1 to $4 range. This is another reason why I like to trade the pennies and micros when the market is flat or bearish.
During Quazi’s search, some of the stand-out stocks that have continued to reside in the “never say die” category over the last few months include:
Boots and Coots; Stock Symbol: WEL (+6%)
Endeavour Int’l Corp; Stock Symbol: END (+11%)
Uranerz Energy; Stock Symbol: URZ (+6%)
Urologix Inc; Stock Symbol: ULGX (+5%).
Energy, health, and metals/mining continue to rule the day.
Some of the stocks listed above would benefit from a little retracement but the overall trend for each still points upward.
Momentum and the Low Volume Bottom Feeders
It wasn’t that long ago when Quazimoto picked up RGRP (now KITD). This stock came off the bottom and has held higher ground ever since. Two stocks that have recently hit bottom and are gaining some momentum are Holloman Energy Corp. (Stock Symbol:HENC) and Broadcaster Inc.(Stock Symbol:BCAS).
Broadcaster Inc. is a developer and publisher of productivity software in the precision design, graphic design, and other related business applications fields.
Holloman Energy Corporation is an independent oil and gas exploration and production company. Its operations are focused primarily in Australia and Canada. The company’s portfolio of oil and gas properties provides stable, environmentally responsible production, and provides a solid foundation for a growing portfolio. The Company’s three major oil and gas properties in Australia are: Gippsland Basin, Cooper Basin, and Barrow Sub Basin. The area includes several major discoveries in various stages of development since the late 1960’s, and has yielded billions of barrels of production.
Although volume has picked up on the major move days, average volume for both is on the low side. Even so, Quazi agrees the momentum trumps the low volume here and we will watch these carefully for another move to the upside.