Penny Stock Marketplace

When looking at stock charts like Vertical Computer Systems (Stock Symbol: VCSY), we remind you that nothing goes up in a straight line…at least not for very long.  Quazimoto is programmed to buy on retracements but when his radar is working, charts like the one below pop up. 

According to the website, Vertical Computer Systems, Inc. (VCSY) is a provider of Internet core technologies, administrative software, and derivative software application products through its distribution network. VCSY’s primary Internet core technologies include SiteFlash™, ResponseFlash™, and the Emily XML Scripting Language, which can be used to build web services. VCSY’s main administrative software product is emPath®, which is designed to handle the most complex Payroll and Human Resources challenges.

Seem like they are in a legal tangle with Microsoft.

New price action and increasing volume are always interesting to follow at the very least.  A retracement coupled with decreasing volume could generate higher highs, or momentum could push the price dramatically ‘vertical’.     
 

Several days ago we were watching Challenger Energy Corp. (Stock Symbol: CHQ).  This microcap had finally broken through a resistance level and momentum could have possibly taken it to higher levels.  Rather than relying on momentum which is the general rule for penny stock trading, microcaps can, and often do, follow the rules of the price and volume relationship in the world of technical analysis.  See the chart below.

Using my crude but available Paint program, I have labelled key areas that should not be ignored.  A full understanding of these areas can be quite profitable when all the “stars align”.

The horizontal line labeled support and old resistance indicates the area where this stock had bumped into on the way up and stopped dead in its tracks and fell back to lower levels. Look back along the full six months.  CHQ had come in contact with this line (at about $5.10) on several occasions. 

Notice near the end of June the huge white candle that broke through this resistance.  This candle was accompanied by very high volume which is a good sign that the price will continue to move in this upward direction.

CHQ retraced briefly and then surged upward (note the arrow pointing to the white candle at the beginning of July labeled “low volume”.  CHQ had made a new new six month high but lacked the volume of the intra-day high three days earlier.  Making new highs on lower volume can often indicate weakness in price action as was true here.  The stock then retreated, falling back to that old resistance line. 

CHQ is now at a pivotal area where past resistance may truly be new support. Trading at or above the $5.10 area is required, and increasing volume should accompany any upward price move.  If this starts to slide back below “support”, the next stop will be $4.00 and those that ’short’ will be glad they did. 

Turn on the television this time of year and what do you see?  Reality shows and re-runs.  Keeping with that theme (and because I happen to be short on time) take a look at our May 28th post regarding the best day for trading.  With the Nasdaq up +3.1%, NYSE up +2.1, and the DJIA up +2.5, this post is worth repeating.  We love to be right and aren’t afraid of pointing that out to anyone who will listen.  A little creative thinking might just enable us to capitalize on this type of occurance especially for those that don’t mind the slow and steady approach. 

Quazimoto has been quiet recently but there is no doubt that a few of those pennies and sub-pennies out there will catch his attention.  If I didn’t know any better, I’d swear that Quazi was flirting with the #1 on the IBD top 100 list.  Hey, who needs penny stocks with sure things like this?

Quazimoto thinks that Quest Minerals and Mining (Stock Symbol: QMNM) could hold the line at .02.  If so, a quick trip back to .05 is a good bet.  On the flip side, don’t let this one lull you to sleep while it drifts back to obscurity.  So far so good. We will be ready to jump on this with any signs of a move to the upside with volume.

According to the website, Quest Minerals & Mining acquires and operates energy and mineral related properties in the southeastern part of the United States.   Quest is a holding company for Quest Energy, Ltd., and Gwenco, Inc.
Gwenco leases over 700 acres of coal mines, with approximately 12,999,000 tons of coal in place. In 2007 Gwenco had reopened Gwenco’s deep mine at Pond Creek and has begun production at the Pond Creek seam. This seam of high quality compliance coal is located at Slater’s Branch, South Williamson, Kentucky. Quest Minerals & Mining plans to open another seam by years end.

After singing the praises of NCEY yesterday, this stock fell hard today.  After running up 250% very soon after we picked this one back on June 16th, reality struck and knocked it back down over 56% with volume.  With the stop triggered, Quazimoto says take the money and make room on the ticker for AccessKey IP (Stock Symbol: AKYI). 

 Apparently, this stock likes to move up at a steady pace much like the tortoise did to the hare.  (I guess the hare in this case would be NCEY).  With AKYI, look for a lower entry point here and then sit and wait.  Time and patience (and continued volume) will pay off with this one.

The watchlist is still crowded with buy on the dippers and just plain hot stocks like New Century Energy (Stock Symbol: NCEY). The only adjustment this week is to bump old-timer UDHC off the list.  Thanks for the memories but a meager 43% gain from our original buy point way back in the middle of April and the slow decline back to obscurity tells me to put the trading capital to work on something else.  The positive note here is that this stock gave plenty of opportunity to get out with a profit.

On a microcap side note, U.S.Concrete, (Stock Symbol: RMIX) tested and rejected the May 27th breakout on significantly lighter volume.  In addition this is very close to a 50% retracement from the recent high.  This slow boat to China actually doubled in price in one month and it could be turning the corner again for further gains.

On a non-penny note…
If you think the price of a barrel of oil has peaked, you might want to keep an eye on the DUG.  This inverse ETF is showing signs of a reversal but I’ll give it a little more time to shake out the weak hands.

Obviously the thing to do was to be bullish in a bull market and bearish in a bear market.
 
                    ~ Quote from Reminiscences of a Stock Operator (Jesse Livermore)

The above quote, once mastered, can turn an average trader into an expert trader. There are countless methods, following indicators and ocillators, and techniques to determine the direction of the market.  Quazimoto has been working overtime to provide accurate data for determining market direction.  The traffic light on the right sidebar is the result of many hours of number crunching, testing, and re-test.  Give it a click or go to the “Quazimoto Market Direction Indicator” page to learn more.  We hope this provides another useful tool for you so that you can be bullish in a bull market and…well, you know the rest. 

With the market down big, it is time once again to point out those few microcaps that refuse to follow the crowd and make gains while all other get beat down.  Today’s winner is Challenger Energy (Stock Symbol: CHQ).  This stock climbed above most others with a gain of 9.9% on a day that saw the Nasdaq drop 2.3%.  This, of course, is an energy stock and in typical fashion doubled in price since May. 

Quazimoto points out that a quick Fibonacci calculation would put this in the $7.25 to $7.50 range in a heartbeat.

Challenger Energy Corp. is a Calgary, Alberta, Canada based oil and gas exploration company which is currently focusing on “high impact” oil and gas plays offshore the Republic of Trinidad and Tobago.