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Hello everyone,
As suggested by Diceman and encouraged by Bigblock, let's open a discussion on sub $1 penny stocks currently trading on the 3 major exchanges (NYSE, NASDQ, AMEX) excluding OTCBB and Pink Sheet stocks due to their lack of liquidity or regulation.
From my past experiences these stocks can double over night and dissapear just as fast. I have exprienced both scenerios, so large comittments of capital are not advised.
Good luck all.
David John Hall
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David, I already gave you my opinion on the pennies but if I were to play them then I have norowed down a list that I will be following. I have used a volume and fundimental screening tool to compose this list.
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Registered User
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Fantastic Apsll! Thanks for the contribution. I have been looking at the universe of stocks trading below $1 as well.
To give everyone an idea of the potential moves these stocks can experience, here are the top 2 and the bottom 2 price moves in this list:
Top:
HAYZ +77%
AIG +70%
Bottom:
TXCO -50%
NYNY -48%
As you can see, these stocks move. A lot.
The exercise is to see if an edge can be created through technical or fundamental analysis to make the big gains possible and the big losses avoidable.
Thanks again Apsll, for the contribution. I really think this will be an interesting exercise.
David John Hall
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Joined: 10/7/2004
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Add FNM, FRE, and SIRI to the list
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Joined: 1/28/2005
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"The exercise is to see if an edge can be created through technical or fundamental analysis to make the big gains possible and the big losses avoidable."
Just my 2 cents. I think that FNM, FRE, SIRI.
Are not the best examples.
Does every penny stock have:
"To big to fail" on it?
I would instantly consider them
good because of what they are.
Does that mean stocks like that can be found
all year round the past decade?
No competition for satellite radio.
US backing up the mortgage industry.
Sure I could have bought Chrysler for a buck
back in the 80's because of gov support.
Then how long do I wait for the next one?
It seems to me some general metric should
be found (if there is one) or seeing how they
respond to technical analysis.
So that a consistent plan can be found for "junk".
That one could use under all market conditions
and not require economic Armageddon to enact
the purchase.
I think there's a difference between taking advantage of
a rare situation and a plan to buy cheap stocks.
(add AIG to the unique opportunity list also Citi
under a buck)
Thanks
diceman
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Joined: 12/5/2008
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Concern Siri,
What's happens to BB's $2000 if the stock goes pink sheet or Bk while he is in it?
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Here's some "junk" to look at.
FREE, SBGI, DNN,HYC,PLLL,FBN,CWST,WRES
This was basically done thru "avoidance". I kept it
under a buck. (by avoidance I mean these actually
had volume or something fundamental compared to
those that didn't)
If you just avoid the real junk you'll end up with a list.
One thing that screams out (but its probably just recent market
conditions) is looking for a pivot low to buy off of. At least it
could define your stop level/risk.
Thanks
diceman
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Hi Tootsie,
If it goes to pinksheet then there will be a couple day freeze as the symbol changes to something like siri.pk then trading will resume and his money will be worth whatever siri is trading at just as it is now. I believe trading resumes at the same price it was when it delisted. I'm not sure what happens when you're holding a stock that goes bk.
Hi Diceman,
Very good point. These are very unusual times. When I did my last test it was pre meltdown and there were about 20 stocks under $1 that had enough volume to be traded, now there are around 100.
What I found was a decent metric was momentum analysis and/or large sell offs that created mean reversion trades. I also found that these stocks, because they can gain 20, 50, or 100% in a few days work well with breakout type analysis and there's usually some large volume "event" that sparks the move.
David John Hall
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Here's a stock, DAN that has doubled in just under 7 days, and very representative of the types of moves possible. This is a 60 minute chart with moving averages on it. After the cross price hits a level of resistance and stays there for a few days. I have found that breaks from resistance like that can mean very quick moves.
These 60 minute live streaming charts can be found for free at www.bestfreecharts.com. Amazingly I just discovered that they are a Worden Bros. product and available to all.
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Line charts might be a better way to go as they reduce the noise. Here is the test of a low that I believe diceman was mentioning. This would have been very effective.
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Here's an example of a large blow off move. Today this stock is up 45%. I have found that a decline of greater than -30% often creates these types of reversals.
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Here is CSAR. This stock gained 700% in a matter of days when it exploded above .01 cents a share. Today it is down 45%. These are very volatile stocks.
David John Hall
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Tootsie,
Here's a little more info for you as I was very curious myself. When the company you're invested in goes bankrupt you loose your entire investment. there may be instances where the senior bond holders may get back some of the assets of the company, then the preferred stock holders and then the common stock holders. Usually there is nothing left.
I have also been researching the number of companies that are delisted from the major exchanges each year. During the dot com bust there were around 300 per year. Since '04 the number has been much lower at about 25-50 for NYSE stocks and 50-100 for NASDAQ stocks. Still, that's quite a lot each year.
To find out if a stock you're considering buying is earmarked for delisting, you can check yahoo finance and they will have the stock flagged. Generally, once a company has been warned, it has 90 days to meet listing requirements or submit a plan for doing so.
David John Hall
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CWST up 51.16%
I'm going to Disneyland.
I've already made plans to market the
"Avoidance System".
(heh, heh)
These things look more like lottery tickets
than stocks.
When I see CSAR all I can think of is:
Hail Caesar!
Thanks
diceman
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Nice call diceman! NYNY also up 13% on the bounce and CSAR up 25%.
Did anyone see CHTR up 184% - wow. This seems to be a great place to put a little energy (inbetween trips to Disneyland).
David John Hall
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Well, if everyone is worried about cheap stocks, all I can tell you is that around Dec I increased my entire portfolio by over 50% (best run ever for me) in around 2 weeks; mostly cheap stocks.
My recent two groups of 20 each are up 50% and 31% respectively.
You see, if I was betting the whole wad on one cheap stock, then I'm really worried about delisting and the like. But with 20 stocks, and these kinds of moves, so far it's looking pretty good.
By the way, sometimes, stocks on the delisting warning list have huge potential. Not long term, no, of course not, but for a quick play, maybe just one in your mix, can be a little interesting. The company starts pulling out all the stops to avoid delisting.
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Would this criteria fit for the bottom feeders strategy?
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Thanks for the Input, David!
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QUOTE (ben2k9) Would this criteria fit for the bottom feeders strategy?
Perfectly!
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Joined: 3/21/2006
Posts: 4,308
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LEA
CDE
Both of these penny stocks had incredible days today. I will still not trade the pennies but the list I posted above is doing very well over the last four trading days since I posted it.
Welcome to the bottom feeders club Ben. If you do some research on "Bottom feeders" then you will find not only great threads from the President of the Bottom Fedders Club (Tobydad) but a few of us came up with some good ideas.
Good luck.
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Yeah I'm going to look back to catch up with the bottom feeders methodology. Never hurts to have another arrow in the quiver!
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Here's one of the most important success factors for trading in penny stocks...ready? It's simple. Don't be afraid to take profits.
Don't try to get all of the profits. Have a plan and take the amount out of the trade that you need. People who try to milk a trade will get creamed. Remember, greedy pigs get slaughtered.
I mean, how much do you need? 20% over a day or two is not enough for you?
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Excellent advice Tobydad,
Do you mind if I ask how you handle the losing penny stock trades? Do you have a set stop loss? The trouble I ran into when i first traded them was the wild volatility. When I tested I found that i would need a very wide stop-loss. Do you use indicators? Or a new low? Or consider the entire position size as your risk? Any insight you could provide into this would be greatly appreciated.
David John Hall
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David;
In this market, I've been waiting for a sign of a strong turn near a very short term bottom. Then I find a collection of beaten down but otherwise strong stocks. (When I say strong, it could mean fundamentally strong or perceptually strong--in other words, strong because people want to believe in it, they want it to go up). I will pick the stocks that seem to have had some accumulation while they've been pulled down with a market drop. After that, I enter about 20 positions. For the stocks that fit the Tobydad profile, I'll use my normal stop loss which is a 1-2-3 pattern near the lower bollinger band or whatever is the lowest recent low.
For stocks running below the Tobydad profile radar, my entry is moving my conditional buy order to a penny above each successively lower high-of-day. On these, I leave a very wide berth, maybe 20% (yes, the drawdown is nerve wracking). The stocks that get stopped out are replaced with the next stocks on the original list I found. I usually let this run about 5-15 days (other than the obvious hot stocks that keep running).
Yes, to all the other questions, of course, you still have to obey the rules. So I do alot of math, using position size to control risk and so forth. Indicators are my old faithful, the Tobydad profile.
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Wow, CSAR up 124%. Amazing!
Thanks for those answers Tobydad. I just wanted to make sure I was trading the penny's the same way. like you said, there would usually be a long way to the stop (20%). At the time I was trading them i really don't think I was taking that into consideration, thinking (oh, it's only 5 cents to the stop). Well, 5 cents on a 15 cent stock is 33%!
I will trade much smaller sizes this time around. Thanks for the tips and ideas. They're always much appreciated.
David John Hall
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Hi everyone,
Just thought I'd do a weekly review of the below $1 stocks as I was looking at gains/losses this morning. Here are the top 10 below $1 gainers for the month:
I don't know how anyone else feels but those look great to me. Not one of them below a 100% gain. The average gain on these 10 is 298%.
Here's the bottom 10 for the month:
In some ways, this list is even more interesting given that the bottom 10 in the group only had one loser. All in all there are 33 stocks in the below $1 and all but one was a loser for the month of April.
Now, before you think I had anything to do with picking this list, the only criteria I used was average volume 90 days > 1,000,000 shares. Obviously, the great month the market just had a lot to do with it.
On another thread, tobydad mentioned the importance of patience with these stocks. That's because day to day they can fluctuate pretty wildly. Here are the 1 week stats for this same group of stocks.
We don't see it so much on the top 10 for the week where the gains were still very good:
I would be happy with any of those gains over a week. Here the average gain is: 26.27%. The difference between the week and the monthly gains are seen in the bottom 10 for the week:
Here the average losses are 17.8%, still less than the average gains, but more reflective of some of the swings you can expect to experience. To combat this, don't load up on any single penny stock -- which will also give you the patience to trade through the swings until you reach a target you are pleased with.
Let's see what happens next week as an ongoing study should provide more insight and some interesting ideas.
Good luck everyone.
David John Hall
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DJH & TD : always shied away from penny stocks because most books says stay away from them. So i have always set my scans at +$5 per share. Are the low priced stocks any riskier than the higher priced? Hi volume probably should be an important consideration? Great info!
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I think that all things being equal. Lower priced shares offer
more profit potential.
(the key being "all things being equal")
There are many low priced stocks that are low for a reason.
It all depends on your ability to separate the good from the junk.
The real problem as I see it. Most new traders by cheap shares
"only" for their price. (no fundamental/technical screening)
They "feel" better trading large round lots.
It doesn't sound impressive to say: I bought 5 shares of GOOG.
So I think the problem is they head towards low priced
shares for the wrong reasons.
Thanks
diceman
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good info diceman, I'll pay closer attention to the fundamentals and take a closer look at less expensive stocks
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Dice, great comments.
This addresses the new approach I have been using in this bear market. Every time there's a reversal, a bounce, whatever you like to call it, from down to a very short term up (a few days to a few weeks), I've been buying about 20 positions in fundamentally sound stocks, or what I call perceptually sound stocks (stocks that the media and/or general populace wantsi to be good or sound). My buy entry is conditional or hidden order one penny above the high of the day as of the close. I adjust it each day. I get the lowest safe entry possible this way (I am not an intraday trader 99% of the time).
Many of these have been very low priced stocks (of course, there are more and more low priced stocks these days so it's not such an anomaly to trade them).
This has give explosive returns. As I said before, if this system will sustain itself for a while, I almost hope the bear market doesn't end.
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TKTM look very positive. Continued positive or even neutral action and this should run. Good buy order is stop or conditional at 4.09.
Profit target about 10%; then we'll see from there.
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Price percent change 1 month...
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All this talk about tobydads results with his stock list made
me think of this penny stock post.
I was curious what this list looked like.
My stocks
Since the post:
FREE = +284.71
SBGI = +114.89
DNN = +70.37
HYC = +34.65
PLLL = +189.33
FBN = +490
WRES = +187.95
Average 8 stocks= +189.01
How did BigBlocks list do?
FNM = -12.5
FRE = -7.32
SIRI = -8.11
average 3 stocks = -9.31
Ouch! That's gotta hurt!
This shows that a bullish run doesn't necessarily lift all boats.
(I may be getting an idea why BigBlock doesn't believe stocks
go up in a bear market)
Thanks
diceman
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Joined: 2/13/2005
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Apsll,
Those were some excellent penny stock picks. Perhaps this type of trading has some merit. How did you "ID" them. Thanks.
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What do you think of GFG?
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It had a serious volume surge on Friday. Looks like the base is forming. Thoughts?
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QUOTE (diceman)
All this talk about tobydads results with his stock list made
me think of this penny stock post.
I was curious what this list looked like.
My stocks
Since the post:
FREE = +284.71
SBGI = +114.89
DNN = +70.37
HYC = +34.65
PLLL = +189.33
FBN = +490
WRES = +187.95
Average 8 stocks= +189.01
How did BigBlocks list do?
FNM = -12.5
FRE = -7.32
SIRI = -8.11
average 3 stocks = -9.31
Ouch! That's gotta hurt!
This shows that a bullish run doesn't necessarily lift all boats.
(I may be getting an idea why BigBlock doesn't believe stocks
go up in a bear market)
Thanks
diceman
Are you guys still bragging? Who are you trying to impress?
+189% of what?
Real traders are always silent and emotionless just like poker players at a table. You don't want to show anyone your hand and you want to keep your attitude clean...
I should also add that it has a lot to do with personalities. The quiet ones typically don't talk about their gains, and they were the ones who killed it every week/month/year. The rather outspoken ones were very mixed. You will know you have mastered your emotions once your spouse can not derive from you whether you won or lost for the day.
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Dryfess, this is a forum of sharing ideas, and and with that comes results.
In my opinion, the only kind of person who would think of sharing good results as "bragging" would be someone who is miserable about their own results and jealous of others.
If you're truly not Bigblock, then please try to act like it. One jerk in the forum is quite enough.
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Very well said Ben. For a self reported poker player Dryfess seems to be very outspoken. I think that his hand is very easy to see. Why him & Bigblock feel the need to come and tell us that we are just a bunch of wanna-be's is proof in itself that he is insecure. He has a hole to fill in his life; one that is not filled in his personal life so he needs to try and fill it in the syber world. Very pathetic indeed.
Thekubiaks, I simply used a custom date sort to find the setup and I used a fundimental and volume screen to find strong companies. It was easy to find these bottoming stocks at a time that the markets were bottoming. I think that it would have been hard to find a stock that has not done well since the March lows..
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QUOTE (diceman)
All this talk about tobydads results with his stock list made
me think of this penny stock post.
I was curious what this list looked like.
My stocks
Since the post:
FREE = +284.71
SBGI = +114.89
DNN = +70.37
HYC = +34.65
PLLL = +189.33
FBN = +490
WRES = +187.95
Average 8 stocks= +189.01
How did BigBlocks list do?
FNM = -12.5
FRE = -7.32
SIRI = -8.11
average 3 stocks = -9.31
Ouch! That's gotta hurt!
This shows that a bullish run doesn't necessarily lift all boats.
(I may be getting an idea why BigBlock doesn't believe stocks
go up in a bear market)
Thanks
diceman
Classic! Absolutely classic.
By the way, dryfess, read a sampling of Diceman's posts on this forum over the last year or two and you will rarely, if ever, find him talking about his results.
Results can be simply a matter of accumulating information to evaluate a trading style/system. Thinking the best of people is always the higher and superior road. I recommend it highly. I promise you that you will not be able to get an argument started with me. Having said that, let me suggest that your protests are beginning to sound a bit like envy. Take that for what it's worth; it's just a free opinion.
You are reading way too much into his reports to say that he is bragging (also see ben and apsll's comments above). If you want to contribute something, please do so, otherwise, I submit that you will gain an audience here if you stop casting stones.
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