In the September edition of Top Penny Stocks to Watch, I mentioned a common problem: Too many students try to force trades. And I always caution against taking trades when there are no great setups…
Which leads to this month’s Penny Stocks to Watch October 2019 takeaway: When a great setup comes along, you have to be ready. That means you have to study the past. You have to know what a great setup looks like. Forcing trades can lead to disaster. But not being ready means you miss some of the best opportunities.
And that’s not OK. You gotta prepare.
I teach a very specific niche strategy. And I’ll do anything I can to help you get into your groove. But you often get one shot with these plays. Apply to the Trading Challenge today to learn to prepare as much as possible for when the next big play comes along.
How to Create a Watchlist
I’m gonna keep this simple because I say it over and over again. This is what I do every day using the StocksToTrade scanning software…
- Focus on big percent gainers.
- Verify they’re spiking on big volume.
- Look for a news catalyst.
- Review the long-term chart for a history of spikeability.
It’s such a simple and effective way of creating a watchlist. And you can weed out stocks that don’t fit all the criteria pretty fast.
How to Use My Top Penny Stock Watchlist
As always, this list is to help you learn to create a watchlist. Some of my picks go nowhere. That’s the nature of penny stocks. I also underestimate stocks regularly.
Trading conservatively can keep you in the game. Gunslingers might post screenshots of big wins for months in a row…
… but when they blow up, you never hear from them again. Or you get to read their self-reflective post about how they “shoulda, coulda, woulda…”
- NEVER follow my alerts to enter or exit a trade. Instead, use them to understand my thought process. Develop the skills to become a self-sufficient trader by joining the Trading Challenge (and studying your ass off).
- Be willing to adapt to changing markets. Don’t attempt to impose your will on the market. The market doesn’t care about you.
- Neither this — nor any other watchlist I produce — is a recommendation to trade. Do your own research. Realize I don’t trade most of the stocks on my watchlist each day. Some days I don’t trade at all because the setup isn’t right.
[Disclosure: Some of the stocks mentioned below have been traded or otherwise discussed by Tim Sykes as part of his daily watchlist provided to Trading Challenge, , , and Millionaire Masters Program subscribers. Tim Sykes may or may not hold open positions on these stocks at any given time. This list is not a recommendation to buy or sell any stock. Do your due diligence. Full earnings claim disclosure here.]
The Broader Market
After the roller coaster ride of August, both the S&P 500 and the Dow bounced to near all-time highs in September. Since then, the overall market looks to be in a consolidation phase.
Consolidation … But It’s Tough to Predict What’s Next
As I mentioned during my annual conference, there’s no overarching trend right now. It’s important to recognize that.
Again, be aware that good setups do come along. But I don’t try to predict anything. So even though I want something to happen to give an overarching vibe, I take what the market gives me. The best you can do is prepare now to take advantage of future opportunities.
More U.S.-China Trade War Fallout
Wall Street was on edge the last weekend of September on rumors that Chinese companies could get banned from listing on U.S. exchanges. The idea behind such a move would be to limit U.S. investment in China as a sort of punishment for the ongoing trade war. Markets calmed when a Treasury official announced there was no plan to follow through.
Trade talks between China and the U.S. are set to resume in Washington, D.C. the second week of October. The latest round of tariffs is set to go into effect on October 15. The tariff implementation was delayed out of respect for the 70th anniversary of the People’s Republic of China.
Uncertainty keeps me focused on trading conservatively.
Recap: September 2019 Top Penny Stocks to Watch
Here’s a brief recap of my September stocks to watch and what they did.
- Fuwei Films (Holdings) Co. (NASDAQ: FFHL) spiked big on earnings back in August. This low float made my watchlist as a potential dip buy into a big morning panic. After a fade back to the $2.60s, FFHL seems to be consolidating in the $2.70 to $3.50 range. I’d need to see big volume and a news catalyst to risk trading this stock.
- Arcadia Biosciences, Inc. (NASDAQ: RKDA) hasn’t made my daily watchlist since the beginning of September. News of this at the market offering and this U.S. patent didn’t keep the stock from fading to the low $5s. It would take a big price/volume spike with news for me to risk my money.
- Workhorse Group Inc. (NASDAQ: WKHS) is still on my watchlist but I’m in no hurry to buy. I’ll happily watch and wait for an ideal setup. While it seems to be consolidating in the low to mid $3s, it’s a choppy stock. The rumored purchase of GM’s Lordstown, Ohio plant is still in the negotiation stage. Big news about the deal could get this one moving. Especially with the United Auto Workers’ strike against GM now in its third week.
- Vivus, Inc. (NASDAQ: VVUS) hasn’t done much since its brief run at the end of August. It would take big volume — preferably with news — to put this stock back on my watchlist.
- Natural Shrimp Incorporated (OTCQB: SHMP) made a 97% run over seven days in early September. Since then it has faded back to mid-range at roughly $0.16 a share. But it’s been on and off my watchlist with a proven record of multi-day runs. I love buying these low-priced stocks but only when they have the right setup.
Top Penny Stocks to Watch October 2019
Ignite International Brands(OTCQX: BILZF)
Ignite is a new stock to the U.S. markets — having started trading near the end of August. I have an upcoming post specifically about BILZF — the setup for my September 23 trade was perfect.
In a nutshell, Ignite is Dan Bilzerian’s cannabis company. They produce and sell CBD oil-based products. And in markets like Canada and U.S. states with legalized marijuana, they sell THC products like pre-rolls and cannabis flower.
The stock didn’t show much volume the first few weeks of trading. Finally, on September 23 it got a big volume boost. This is a great example of informational inefficiency — something I encourage every student to study.
I traded BILZF three times between September 23 and 25. My overnight trade on September 23 was a perfect first green day setup. I also covered that trade in this edition of the millionaire mentor update.
A lot of students mentioned they think I’m paying too much attention to BILZF. But based on the perfect setup and Bilzerian’s strong ability to build a business, frankly, they’re wrong. BILZF is something I’ll watch for potential dip buys — preferably into a big morning panic. Or a big morning spike with volume and a news catalyst.
Guardion Health Sciences, Inc. (NASDAQ: GHSI)
Guardion is a health science company specializing in medical food supplements, or nutriceuticals. The main focus of the company is eye diseases like age-related macular degeneration (AMD).
After a big gap down in August following a dilutive offering, GHSI traded flat until mid-September. The stock more than tripled between September 13 and 25. News of the acquisition of NutriGuard on September 23 helped the multi-day run. The stock now looks to be consolidating in the $0.70s.
I traded this stock back on September 19 — a classic dip-buy into a big morning panic. Now I’m watching GHSI for a possible big morning spike aided by volume and a news catalyst.
United Energy Corp. (OTCPK: UNRG)
United Energy gets the red stop sign and Dark or Defunct designation on OTCMarkets. “Warning! This company may not be making material information publicly available.” That’s not a good sign … especially for buy-and-hold investors.
So why is it on my list? Because after years of trading sub-penny, the stock has suddenly come back to life. It’s now a proven recent OTC multi-day runner with the ability to gap up overnight on a strong first green day.
Take a look at the UNRG chart:
I traded the stock on September 25–26, taking advantage of the big percent gain. The stock finished strong into the close, and there was a morning gap up. UNRG nearly doubled from my buy — going all the way to $0.27 per share on September 26.
I’ll continue to watch this for big morning spikes with volume and/or news. Caution: there hasn’t been any news or financials on this stock for a long time. Which makes me think some cokehead promoter is doing a good job. Keep up the good work, promoters.
Clancy Systems International Inc. (OTCPK: CLSI)
Clancy Systems has an Android app for issuing parking tickets. According to the website, the ticketing officer only needs to take a picture. Then the app goes to work filling in the necessary details. Then the officer confirms the information, selects the violation, and issues the citation. (I’m glad I sold all my cars — one less thing to worry about.)
CLSI is a recent multi-day runner from August. The recent catalyst appears to be the company’s willingness to be transparent about financials. Like UNRG above, CLSI has the Dark or Defunct designation on the OTCMarkets website.
But on September 25, the company released 10-K annual reports for the last two years. Again, this is an example of informational inefficiency. And another reason to love penny stocks.
Here’s the CLSI chart:
I traded this stock three times on September 30 as it was a multi-week breakout with big volume. It was tough to get executed, so I took small dollar positions. It’s tough to dip buy stocks trading this low. So even though that would be my preferred setup on a stock up this much, I’ll look for big morning spikes. Or a breakout to new highs with big volume and, preferably, news.
Rainmaker Worldwide Inc (OTCPK: RAKR)
Rainmaker manufactures an air-to-water system and a water-to-water purification system. The technology can use wind and solar power — leaving almost zero carbon footprint. The company website says…
“Rainmaker’s purpose is to produce safe drinking water for communities in need so they can thrive and never go thirsty.”
RAKR trended up from less than $0.01 to $0.24 during September. On September 30, the company announced they won the EU Horizon 2020 Project award. They also received a $2.5 million grant to develop a water solution in the Canary Islands. The stock went from $0.2299 to $0.2740. That’s only 19%. But when you consider how long it takes most expensive stocks to make a similar move, it’s impressive.
Here’s the RAKR chart:
I’d like to see a lot more volume before taking a trade on RAKR. That said, volume over the last three weeks of September is the highest for years. So I’ll keep an eye on this one to see what it does.
How to Use Top Penny Stocks to Watch October 2019 Update
As always, my goal is for you to become a self-sufficient trader. To do that, you need to get good at creating watchlists. It’s one of the most basic things you should be doing. So use this list as a guide. Watch the stocks, but don’t think they’re gonna be the next Microsoft. They’re not.
What stocks are on your watchlist? New to trading? Comment below with “I will focus on big percent gainers.” I love to hear from all my readers, so comment below!