Penny Stock Marketplace

As the market has been beaten down over the last few days, several microcaps have been (and still are) flying high.
These pharmaceutical stocks have been making new highs and show little sign of slowing down.  The best prescription if you want a piece of this action is to wait and watch for a slight retracement.  Jumping in now may cost you some time and money in the short run.  Sitting on your hands and letting these contrarians build a little cause for the next move up will pay dividends.  We’re just letting you know ahead of time so you can make room on your radar screen.

NPS Pharmaceuticals (Stock Symbol: NPSP) is currently trading at $8.69.
Pharmacyclic Inc (Stock Symbol: PCYC) is trading at $2.65.
Synta Pharmaceuticals (Stock Symbol: SNTA) is trading at $9.51.

All of these fit the criteria of a microcap with market cap under $500M and a share price of less than $10.  If Quazimoto’s timing software is working properly, these stocks are reaching the end of their current upswing and are due for a pullback.  If volume declines on the downside, the probability for a profitable trade will present itself.

Patience is a virtue…and often in short supply.

Reminds me of dear old great, great, great Grandpa Prescott’s order at the battle of Bunker Hill…

“Don’t fire until you see the whites of their eyes.”

Down days like this one give us the signal to run screens for stocks that bucked the system and actually made a couple of percent by days end.  Parameters for this stock screen included the typical microcap requirements for market cap ( less than 500 million shares) and stock price ( greater than $1 but less than $10).  We also threw in a requirement that the stock had to have been making gains over the last 6 months.  We got 12 hits.  Four of them were drug stocks. This sector seems to be showing strength relative to other major sectors.  More importantly, we picked up Pgt Inc. (Stock Symbol: PGTI).

As you can see, this stock, although thinly traded, has been stepping up on a regular basis and actually showed some strength on a day like today.

Pgt Inc. is a manufacturer of impact-resistant aluminum and vinyl-framed windows and doors and offers a range of fully customizable window and door products. Maybe we should have added this to our hurricane stock picks from several months ago.  More on this company can be found here. 

We are not betting the farm on this one but we will watch closely to see if we can ride the next wave up.

Our list of stocks to review for this update are quite diverse.  Take a look at the last post.  Quazimoto’s new microcap screen has been performing well with those two recent picks.  DENN is up over 12% and OPTV is up over 7% since Monday. 

As for the penny stocks getting the boot off the stock ticker…that oldie but goodie BLVD up over 100% twice since April has finally flattened out to the point of obscurity.

 KITD (formally RGRP) made nice gains off the bottom but since volume has died out we must give this one the heave-ho.  Thanks for the memories and the extra trading capital. 

QMNM never materialized.  This falls into the “you can’t win them all” category. 

Finally, GSPG, a mid-June pick and profitable 140% gainer looks like it is out of favor. 

Quazi’s performance has obviously been quite impressive.  Bouncing from high probability micro-cap plays to strong momentum penny stocks has been a winning combination.

Quazimoto is at it again.  Crunching numbers on the weekend in a never-ending effort. Adjustments to the last R&D project yielded some interesting results.  Denny’s Corp (Stock Symbol: DENN) and OpenTV Corp.(Stock Symbol: OPTV) popped up using some basic criteria that we will be glad to share just as soon as we get confirmation that price will move in the right direction.  According to Quazi, that should happen within five or six days.  When looking at both of these charts it is apparent that retracement on low volume coupled with fairly decent price action over the last six months are the basics used to form this ‘model’.  This reminds me of the logic behind casino profits.  Keeping the odds in your favor over the long haul will guarantee success.  Just remember to keep the losing trades from getting out of control.

Hollund Industrial (Stock Symbol: HLLD) will be watched closely and Quazimoto may allow me to put this on the ticker. He will not completely endorse this one until it retraces to the .04 level but I am thinking this could go higher from here.  I do agree that the volume will have to pick up if this one is real.

Here’s a link to the company site if you like to look at other things beside charts.

The stock symbol may be due to change.  If so, try HIMR.

Our post from last week gave you a snapshot of some of the trial stock screens that we run.  Quazi is always hard at work to improve the probabilities.  Some of the microcaps have popped for nice gains from recent posts.  Challenger Energy (Stock Symbol: CHQ), after hugging the $5.00 support level ran to $5.75…a nice, painless 15% gain. Click here to see CHQ post. 

Updating our last post, Orsus Xelent Technologies, (Stock symbol: ORS) jumped 15% higher, MFG fell below resistance and was abandoned, and we are still watching the action as Cypress Biosciences Inc., (Stock symbol:CYPB) is riding the $7.00 support line.  No major losses and tradeable, profitable plays are what we are all about and with the market indicator still giving the trading signal, we will take full advantage.  Disregarding all the market noise and looking at the facts presented will keep you on the right side of the trade.

Quazimoto has not seen much in the way of penny and sub-penny trades that show advantages for the trader lately.  Quazi says that he would rather spin the roulette wheel and take in Cirque Du Soleil.  Vegas is nice and warm this time of year.   

We spend hours each week developing new methods to extract money from the market.  Since we have very few secrets, I will share our current efforts and track their progress over time. Recently, I asked Quazimoto to give me a current list of microcaps that have an upward 30 day trend but also have been severely oversold.  An oversold indicator in this case is achieved by dividing the difference of yesterdays high over the last 14 days and yesterdays close by the difference of the extreme high and lows. This is very similar to the Williams %R indicator.  Additionally, Quazi will weed out all stocks except those that show the price approaching or at potential support.  Support and resistance are important for obvious reasons but the real importance lies in the fact that they give a trader a specific plan by using these areas as grounds to buy or sell.  Anything that encourages “trader discipline” is worth throwing into the mix.

Quazi revealed three stocks based on yesterday’s action:

MFG - Mizuho Financial Group Inc
CYPB - Cypress Biosciences Inc
ORS - Orsus Xelent Technologies

Check out the charts below and you will see oversold stocks at or near potential support. 

 Keep in mind that we do not endorse any of these because no backtesting or any testing for that matter has been done.  Let the support dictate your actions if you insist on trading these. ( I know we will). Set stops accordingly by using the advantage of a support line.  If we have success over the next several days, you might just see Quazi add this to his arsenal.

 None of these stocks will be listed in Quazi’s stock ticker but our results will be posted in a future blog…especially if we make a few $$ .

With the recent pick of VCSY (see previous post), now might be a good time to off-load some of the “dead wood” clogging the penny stock ticker.  Some of these made a good run but have now retreated to flatline status.  Others have simply lost the previous volume that momentum often brings.  The rest are just plain losers.  The boot goes to:

SRSR
ERHE
BCAS
                                 HENC
                                 DPDW

We will be gearing up for more great penny stock picks.  August is generally a slow month for Quazimoto but where there is a chance to make a few $$ with a good penny stock, Quazi will make the time.

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.