Monday, 25 March 2013

Penny Stocks on the roll again?

Dear Friends,

With the Cyprus incident over, it does seems like Singapore stocks is on a roll again. Penny stocks are again on the limelight. We Holdings again grapped the top volume with Magnus and Ntegrator also in top 10 list. These are the stocks that not long ago, dropped from the heights, that have fallen by 50% or more.

These few days they are staging a comeback fiercely. The thing is will this run fizzled out. We shall see. To play these counters, we must be disciplined and have the time. Those without discipline and time are not advised to play with such volatile stocks. It is best you watch the good earnings stocks if you are working and cant monitor the screen. Stocks like Ezion, Guocoleisure and OSIM are what I label as good earnings stocks as they display results over the analysts expectations. These will be the stocks to watch this quarter.

Last article we wrote on the good recommended earnings stocks:
http://www.danielloh.com/2013/03/a-show-of-why-earnings-is-important.html

Coming back to penny stocks, one important criteria to play pennys is that we have to know the resistances of the pennies even before we enter. Watch how things play out at major resistances,

Eg. We Holdings - $0.15 and $0.20 are resistances. You may take half of your profits off the table if it reached your resistances and not cross over

Eg. Ntegrator - $0.15 and $0.20 also a resistance

Eg. Magnus - $0.075 and $0.10 are major resistances.

By the way, as a guideline, whenever such stocks burst forward, likelihood is that within 6 days, the run will fizzle out. So be careful not to go in on the 5th or 6th day. Wait for the consolidation... Set your stop loss below the consolidation support if you enter in the consolidation phase like what we always advised. And once you are in profit, constantly shift up your stop loss to guard your profits.

Rgds
Daniel
www.danielloh.com

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