Furthermore, when a person or group of persons acquires beneficial ownership of more than five percent of voting shares, they'll file a Schedule 13D. A 13G reports the acquisition and other information within ten days after the purchase. Both of these filings would be highlighted by traders looking for "Whale" trades as they generally connect to large funds or investment trusts.
Patents/FDA Trials/Oversight Body Updates
Other publicly available data that can prompt early momentum even before the news is released involves oversight bodies; let me explain. The U.S. Food and Drug Administration (FDA), for example, may report approval of or a response to specific clinical trials on its official website even before a company reports it to its shareholders. Furthermore, when companies submit a trial framework and file it with the FDA, it could get posted to the FDA site before any news comes out. This is something that can give an edge to the well-informed.
What I'll call "the oversight body advantage" can also be seen from things like the US Patent and Trademark Office, The SAM [dot] gov site for government contracts, or even foreign bodies like the European Medicines Agency, Japan's Pharmaceutical and Food Safety Bureau, or various other oversight bodies.
The main thing to remember is that these associations and administrations aren't working on a company's schedule. They release or post information whenever a decision is made within the organization. If you know how to search for this type of information, you've got a good chance of reacting before novices.
Short Squeeze Penny Stocks
Now, we get into more technical trading based on data. The idea of short squeeze penny stocks has grown in popularity ever since the big moves made by AMC Entertainment ( NYSE: AMC ), GameStop ( NYSE: GME ), and even Eastman Kodak Company ( NYSE: KODK ). This entails finding penny stocks or higher-priced stocks where the percentage of the publicly traded float has a high level of short interest. Also known as short float percentage, the higher the figure, the more traders are betting against a company.
Since shorting involves borrowing stock, selling it, then repurchasing it at a lower price to return the loan, people make money if stocks drop. But if share prices rise, the stock loan still needs to be returned. In the event of a squeeze, short traders get forced to repurchase shares at higher prices (instead of lower prices), take a loss, and add to the underlying bullishness in specific stocks.
A squeeze tends to trigger a volatile and aggressive breakout that can last a few minutes or even a few days. Plenty of outlets offer short percentage data, including brokerages like TD Ameritrade. We'll also frequently report on potential short squeeze penny stocks right on PennyStocks.com.
Low Float Penny Stocks
Like short squeeze penny stocks, low float penny stocks can be incredibly volatile. For those just learning about this, a company's "float" references the total amount of shares actively traded in public hands. It doesn't include other things like restricted stock or unregistered securities.
Remember that the float can fluctuate depending on factors like buybacks, debt conversions, and other events that would add to or subtract from the float. Just know that the float will never be larger than the Outstanding Shares, and the Outstanding Shares (O/S) will never be larger than the Authorized. So if float data isn't easily accessible, a low O/S can act as a ballpark.
When we talk about "low float," the general rule of thumb sets the threshold around 20 million shares or fewer. However, if you've traded for a while, you know that the lower the float (in some cases a few million), the higher the volatility and the bigger the breakout potential. Keep in mind that breakouts can quickly turn into breakdowns thanks to the exact reason why the uptrend triggered in the first place.
For example, Insignia Systems ( NASDAQ: ISIG ) was able to break out from under $5 to over $35 within a matter of days, thanks to both a low float and short squeeze. However, looking at where it closed on January 14, ISIG stock is clearly, well off of its recent high. If you're looking for low float penny stocks to buy, be prepared for volatility and have a plan in place ahead of time.
Like upcoming earnings, companies may or may not announce upcoming industry conference participation dates. For example, biotech companies frequently attend investor and industry conferences. They'll present new updates, trial results, or give updates to their peers.
In many cases, these can ignite another "buy the rumor, sell the news" type of event in the stock market. Then again, it can also act as a primer for what's to come if a company reports something even more significant than initially expected. We frequently update on upcoming events to be aware of right on PennyStocks.com.
If there's one thing 2020-2021 taught us, it's that social sentiment can play a significant role. The rise of the Ape Army has continued fueling the AMC/GME fire. It has also brought rise to new trends in the stock market. It's important to note that social sentiment isn't always an indication of interest or potential.
In many cases, rumors are created by unsavory groups to quickly boost shares prices so that they can liquidate their positions. This tends to leave inexperienced traders holding a big bag. If you're reading information on forums like Reddit, sites like Twitter or Facebook, or subscribing to trading groups, there's no substitute to doing your research. If anything, observe the discussion and then verify further with your research.
Not all penny stocks have options available to trade. But of those that do, options flow can play a role in trading trends. In general, higher options volume (calls or puts) can be seen as an underlying play on sentiment. In some cases, higher call volume for a specific strike can be seen as a bullish indicator and spark optimism. Higher put volume can result in the opposite. Like social sentiment and insider trading, there's no guarantee that the outcome of significant options volume or open interest will dictate the ultimate move in a stock. However, in the short term, options flow is something traders use to gauge sentiment. Once again, observe, then verify using your personal research methods.
How To Find Penny Stocks To Buy
There are plenty of ways to find the best penny stocks to buy. Based on what I've seen from thousands of new traders, they fail to research things beyond news headlines or social sentiment. Today we looked at 10 "secret" ways to find trade ideas. Now it's up to you to take this further and figure out how you can fold these tactics into your trading strategy for 2022.
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