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A penny stock breakout happens when a micro cap stock moves above a resistance level on volume that is heavier than normal. Many professional investors generally buy mid to large cap stocks based on this technical aspect, because of momentum and the theory that the stock is now being owned by stronger hands.

However, many of these institutional types stay away from even the most text book penny stock breakout, due to the lack of liquidity in some of these names. Does that mean you should do the same on a retail basis ? Absolutely not. Keep in mind that most retail investors don’t impact a stocks’ liquidity because they are usually investing between $1k and $20k in an idea. Even if it’s the hottest penny stock. On an institutional basis, trades of $200k wont even come close to making a dent in the funds’ returns even if the name turns into a massive gain. This is just another reason that many hedge funds just stay away.

Although, when you check out a potential penny stock breakout from a retail standpoint, even the most skeptical chart technician has to admit that a chart is a chart, and in theory, stocks often see follow through when the set new highs or break resistance on substantial volume.

Penny Stock Breakouts


For instance, we highlighted Jammin Java (JAMB:OB) and Lithium Exploration Group (LEXG:OB)extremely early in their breakout phases as they were setting news highs. Basically, before the herd came in at the end right before both stocks pulled back sharply. Keep in mind that their are retail investors who make a living trading zombie stocks like Washington Mutual (WAMUQ.PK) and Lehman Brothers (LEHMQ.PK) based on the penny stock breakout process.

Now here is the hard part, you have to learn how to read charts and it does take time to get comfortable with this style of trading because many of these potentially hot stocks do briefly pull back after setting new highs. And sometimes, even seasoned investors can get shaken out of a mild downturn.

So if you decide that this style is for you check back or subscribe. Just remember that heavy volume is the key sign during these moves, and always keep your losses small. A penny stock breakout happens almost everyday and you want to be solvent enough to play the next opportunity.

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obje OBJEI just wanted to touch base with subscribers and readers on something that could be interesting next week. Last week we saw Lithium Exploration Group (LEXG:OB) make a run that a penny stock trader will be talking about for years, and now I want to touch on the psychology of what sometimes happens after those runs.

LEXG created massive gains for those who were early, and even for some who were a little late, but Friday told us a different story for those who were a in very late and didn’t sell. Between profit taking and short selling, shares of LEXG were smashed. Many saw it coming, but didn’t know exactly when the fall would happen. However, massive runs in individual penny stocks, cause those who are coming off a profitable trade to search for “the next one”.

So this week we are going to put a few names out in front of you to add to your penny stock list. Our reasoning is simple, there should be a rotation of the LEXG profits moving somewhere. Which stock will it be ? I have no idea, but I will be sure to provide you with some possibilities.

Obscene Jeans (OBJE.OB) is the first that I will touch on. OBJE is basically a retail/fashion stock that is attempting to break into the higher priced jean and sweatshirt etc. market. The stock traded made a new high on Friday and attempted to break the $3 range. A slew of PR’s have been issued, and while we have seen a big volume increase from the week before, OBJE only traded 42k shares.

obscene jeans obje OBJEAs far as fundamentals go, there really aren’t any yet, there were five PR’s though. I want to mention the PR’s because they sometimes are a prelude to future volume. OBJE is in it’s developmental stages and they actually haven’t manufactured and clothing yet. But as I touched on in prior pieces, fear and greed often take over when trading hot penny stocks, and momentum and price action often prevail over PE’s and cash flow. OBJE could also attract former Horiyoshi Worldwide (HHWW.OB) and Lyric Jeans (LYJN.PK) longs. All three are retail/fashion based stocks and some penny stock buyers have racked up huge profits in both HHWW and LYJN in the past.

Remember, we are trying to think outside of the box here because we are looking for the rotation of the LEXG funds. So add OBJE and the other LEXG rotation stocks that we will be previewing this week to your list of stocks.

Please subscribe and check back for more news on hot penny stocks, IPO markets and alerts on some of the best penny stocks to buy.

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penny stock fortunes Penny Stocks FortunesHow do investors make penny stocks fortunes ? Well, it’s not that easy. It’s human nature to think that each and every time that we are about to hit a home run when we purchase a penny stock, but it’s not that simple. The main reason is because human nature takes over and every stock seems to be the best stock when it’s purchased. It doesn’t matter if it’s a penny stock or a blue chip.

Penny stocks fortunes are made by few, but those who do it use three simple rules. They cut there losses, scale out of the positions and let the last piece of the position run.

Cutting your losses especially with volatile hot penny stocks is easier said than done, but the key to playing this game is to live to fight another day after you are stuck in a loser. For instance, if you invest 10k in a penny stock, set some sort of downside limit. To some it may be 2k, and for those who are more liquid it might be little more. This strategy will allow you buy the next idea and not be wiped out by a losing trade. For instance, how many people continually averaged down in stocks like Washington Mutual (WAMUQ.PK) and Spongetech (SPNGQ.PK) ? Only to be almost wiped out. The only people who made money on these names were penny stock scalpers, not longer term investors looking for penny stocks fortunes.

The scaling out part of the strategy is key in seeking penny stocks fortunes. In as few words as possible, take positions of in 1/3′s. If you buy 3k shares, sell 1k when you see a slight profit, then sell the next third on the next move higher. Lastly, hold the final piece for the home run price, but use a mental stop at your initial entry price. This allows you to scalp and be long term at the same time. It also allows you to play the last profitable piece of a position with little risk.

Remember everyone wants to be greedy, it’s natural. However, the key is to live another day. Successful investors don’t need to hit 70% of their trades. They just need to cut losses short and let the winners run until the fundamentals change.

Also look for more market reports, IPO news and hot penny stock alerts. Remember, penny stocks fortunes are usually not made by luck.

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Penny Stocks 2010Today we are recapping three of this year’s biggest hot penny stock movers.  All of the names mentioned below seem to still be very active and volatile. This could present opportunities for trading or long term investing.  There have been some huge moves in the penny stock world this year, but these are some of the more notable and publicized companies.  Add these companies to your penny stocks list and keep your eye on them.

Cascadia Investments (CDIV.PK)



Cascadia Investments closed at 5.5 cents on December 31, 2009. CDIV is a “True Penny Stock”.  Currently CDIV is a favorite of short term penny stock traders and has basically become a very liquid cult stock with a massive message board following. CDIV is a social gaming company that is attempting to gain traction in the multi-billion dollar industry. CDIV has very little revenue despite acquiring several game apps that were developed for the iPhone. Much of the CDIV trading community views the stock as a potential short squeeze candidate. As evidenced by a move to .72 on March 10, 2010.

Rexahn Pharmaceuticals (RNN:AMEX)



Rexhan Pharmaceuticals is a clinical stage biopharma company that proved to be an explosive penny stock winner this year. RNN closed at .68 on December 31, 2009 and traded as high as $3.65 on April 12, 2010. RNN was trading in a bullish uptrend before the big price and volume spike. The move was predicated on positive data from the anxiety and depression drug Seradaxin and the potential of ED drug Zoraxel. The stock has pulled back recently and is attempting to build a base.

Radient Pharmaceuticals (RPC:AMEX)


Like Rexahn, Radient Pharma is also a biopharma company that closed at .24 cents on December 31, 2009. Onko-Sure, which is RPC’s cancer screen product attracted major interest in the stock. The low cost of Onko-Sure’s non-invasive test and distribution agreements in Russia and India propelled RPC shares to $2.19 on April 12th, 2010. Since then RPC shares have pulled back and are attempting to form a base. The shares still remain extremely volatile.

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Trading System

Penny Stock Trading System

Penny stocks are the shares that are offered to public by tiny or new organization that can’t meet the requirements of major stock exchanges. Many traders are deal in such shares as they want to start with little investment. Always keep in mind there is high risk involved because their value can lower down to zero anytime. click here for further information.

To pick correct penny stock, you need to have unbiased information of company’s business structure. As you do like while investing in other stocks, you need to understand type of business particular company are involved with and their future business plans.

It’s uncommon that the companies dealing in penny stuck shares have complicated businesses, more likely they are simple business that is easy to understand and research. Companies usually offer such shares for startup capital for their business. There are also some honest companies who have huge potential

Penny Stock Trading System

Penny stocks are considered as one of the high risk investment options as per SEC. The financial reporting rules for penny stocks are not as stricter as they are for other shares that are listed on national stock exchanges. Pink sheet one of the types of penny stocks has no regulation at all for financial reporting.

Due to less or no reporting requirements, trading penny stocks alerts becomes tricky, and chances of fraud increased. Fraudulent activities prevailing in the penny stock market can easily influence the share price. This activity is known as Pump and Dump. After all these facts penny stocks certainly have potential of making huge profits. You can invest in shares of small companies that have potential to make money in future. Always remember that choosing right pick can give you good returns. If you suffer loss on some of penny stocks, other successful move in penny stocks can compensate all your losses.