May 11, 2020 (Penny Stocks via COMTEX) -- It can be tough at times to trade penny stocks . Some days there are only a few names to choose from. But there are other days where there seems to be plenty of penny stocks to buy . In either case, having your plan in place can definitely help. Now, you might be asking, “How does a plan help if there are too many penny stocks to watch ?”
That’s a great question if you’re new to trading. The name of the game is to find the best set-ups possible. Even though there may be countless stocks flying about, you can’t catch every breakout and effectively trade the full “rip”. Could you scalp? It’s possible but then you’re doing 10 times the work for possibly the same payout or less.
So a good rule of thumb is to look for top set-ups or “grade A” set-ups . These are ones that have consistency in trading, aren’t ripping up and down within the blink of an eye, and give you a chance to enter and exit comfortably. The beauty of having too many choices is that when you trade out of one profitable position, you can take your time to find the next “grade A” set-up.
I talked about having a strategy in place. That strategy doesn’t just involve proper diligence but also a proper way to actually trade through your position. Some people will buy all shares at one price and sell all shares at another. This is inefficient. One of the best ways to stay in winning trades longer while also being able to cut out of losing trades quickly and with minimal loss is through tiered trading.
This is an advanced strategy that involves buying and selling different chunks of your “full position” as a stock is going up. By doing this, you essentially build your stock position by taking in different sizes until you reach 100%. This is much easier shown than reading about and there’s a quick way to learn from an actual, former hedge fund trader .
Needless to say, identifying a trade set-up is important but understanding how to navigate through a trade is just as important. With this in mind, here’s a look at a few penny stocks under $3 right now. Will they be the best penny stocks to buy this week? You be the judge.
If you read our articles frequently and you’ve done so since late last year, you’re likely familiar with CymaBay Therapeutics ( CBAY Stock Report ). This was one of the penny stocks to watch before Black Friday 2019 . At the time, CBAY stock traded around $1.35 and had just halted the clinical development of its Seladelpar treatment. Unfortunately the initial hype or hope for a “dead cat bounce” didn’t cut the mustard and CBAY stock has been locked in a trading channel between $1.21 and $1.90 ever since the start of the year. But that all changed this week.
CymaBay not only reported its Q1 earnings, it also revealed some “easter eggs” in its corporate update. First, an independent expert panel unanimously concludes there is no clinical, biochemical or histological evidence of seladelpar-induced liver injury in the Phase 2b NASH study.
Second, the panel resoundingly supported re-initiating clinical development. Finally, CymaBay explicitly stated that it plans to re-engage with the FDA as quickly as possible. Keep in mind that before it halted clinical developments, CBAY stock was trading above $5.50 a share.
Adding fuel to the fire, CymaBay beat EPS estimates and narrowed its Q1 loss. “While we have not yet discussed full results from our investigation nor any of the panel’s conclusions with the FDA, we are planning to re-engage with the agency as quickly as possible. At this point, we cannot guarantee what the next steps or timelines will be, but we are confident that we have conducted a truly rigorous, independent review to help us definitively support the conclusion that seladelpar did not cause drug-induced liver injury in our NASH phase 2b study,” said Sujal Shah, President, and CEO of CymaBay.
An oldie but a goodie, MicroVision ( MVIS Stock Report ) was one of the penny stocks we’ve kept a close eye on since April. At the time, MVIS stock was trading around $0.30 as it brought on strategic advisors to help explore alternatives for the company. Since then, rumors began to filter across trading groups and on social media about a possible deal with Microsoft ( MSFT Stock Report ). While there haven’t been any full details given regarding a formal announcement by either company, speculation has been a big driver recently.
MVIS stock was one of the big movers from earlier in the month and eventually reached highs of $1.82 before plummeting back to the mid $0.50 range. No doubt this was a great move from the first discussion back on April 14th. But like all things, profit-taking is generally expected as nothing goes up forever without at least a little consolidation. As we saw, however, that wasn’t just a “little” consolidation from MVIS; it was a big drop. Shares continued to dip after the company released its earnings. But the latest buzz on Monday breathed new life back into MVIS stock.
Late in the afternoon, the rumor mill began buzzing again. This time the discussion was one about the “Microsoft deal” again. Craig-Hallum Capital Group (one of the MVIS strategic advisors)’s analyst Mic Malouf said he “believes the primary drivers of this dramatic increase are speculation that the company’s technology is in Microsoft’s Hololens 2 and that Microsoft would be interested in buying MicroVision.” – according to statements on TheFly.
But he feels that this speculation is “significantly overblown in the stock price”. Then again there was a blog article that was published alluding to a Microsoft/MicroVision deal “likely happening.” And who doesn’t take blogs as the only place you need to go for DD? Again, there has been no confirmation of this deal by either company as of 7 PM EST on May 11, 2020.
As of its most recent PR from May 8, MVIS is also still “exploring all options including the sale of one or more of our module product verticals and related technology or a potential sale of the Company,” according to Sumit Sharma, MicroVision’s CEO.