Penny Stock Trading Patterns
(POH) — Pullback Off Highs –
When a stock in an uptrend pulls back off of it’s highs to an area of support. Provided market conditions favor buying stocks, you can either buy it at support or upon an upside break of the pink line.
(POL) — Pullback Off Lows –
The opposite of the Pullback Off Highs pattern. When a stock in a downtrend rallies off of its recent lows up to an area that once was support but is now resistance. Provided market conditions favor shorting stocks, you can either sell the stock short at resistance or upon a downside break of the pink line.
Changes In Trends (Down To Up) –
After being locked in a downtrend, a stock forms a double bottom. This is your first clue that a change in trend could be near.
The blue boxes represent what we call “The First Thrust Up”. Your first trade on the long side is the break above the pink line (second blue box). And now, it’s all about seeing the stock establish a new uptrend pattern.
When this happens, we want to take additional long side trades as it Pullsback Off of its Highs as shown by the second pink line. A break above the line triggers a new long side trade. See the uptrends album for more information and examples of how to trade uptrending patterns.
Changes In Trends (Up To Down) –
The opposite of the Up To Down Change In Trend pattern. Your first clue that a Change In Trend is near is the development of a double top (red line). When it breaks the pink upward trend line to the downside, that is your first short-sell opportunity.
Then it tried to recover as shown by the pink lines. We call that Pullback Off Lows patterns. A break of the pink lines is the trigger point for additional short-sell trades.
When a stock that has broken out into new highs gets slammed back down to support of the prior breakout. We call it a slam because when it gets slammed down to support, buying the stock at that point becomes a good buy because you are buying at support and minimizing your risk.
Penny Stock Technical Terms
Full Stohcastics –
The baramoter to determine whether a stock is oversold or overbought. We want to buy stocks emerging from one of our signature uptrend patterns when the full stohcastics show an oversold condition. The lower the number, the more oversold it is. And when selling a stock short, we want to do so as it triggers a short-sell trade from one of our short-sell patterns with the stohcastics in overbought territory. The higher the number, the more overbought a stock is.
The Fibonacci number sequence (1,2,3,5,8,13,21,34,55,89,144,…) is constructed by adding the first two numbers to arrive at the third. This is a tool used to plot potential retracements of any high and low , the most frequent are 38.2% , 50% and 61.8%
50-Day Moving Average –
The average price of a stock over 50-days. It is often an area where a stock in a uptrend will find support and where a stock in a downtrend may encounter resistance.
Negative Divergence –
When looking at a chart with the RSI indicator on it it is when an issue is hitting new HIGHS BUT the Relative Strength is not comfirming those highs. In other words the issue is going up but not on accumulation strength and usually is a sign of low volume. Negative RS Divergence usually takes place at market tops and peaks when viewing charts.
Positive Divergence –
When looking at a chart with the RSI indicator on it it is when an issue is hitting new LOWS BUT the Relative Strength is not comfirming those LOWS. In other words, the issue is going down but is under accumulation
Positive RS Divergence usually takes place at market bottoms and lows when viewing charts
Single Digit Midgets –
Our term for stocks that are priced under $10 a share.
KODR (Kiss Of Death Retracement) –
This is what we call an issue that has broken an uptrend and comes back up to kiss the underside of the uptrend its just broken only to be turned away and tends to roll right back over to the downside shortly there after. Call it a trendline break to the downside with a snapback rally.