U.S. futures are pointing to a weaker open this morning. However, it shouldn’t play too much of a role considering we’re playing penny stocks and they don’t correlate with the overall market.
That said, we’re doing things a little different today. It’s your chance to earn while you learn.
I’m giving you a taste of my watchlist today… stocks that I think could be in-play today… as well as what patterns I’m looking for.
How to Scan for Penny Stocks to Trade
Today, we’re going to be doing things a little differently… and I’m going to be going over a watchlist of penny stocks.
I’ve been getting a lot of questions of how exactly I was able to return returned 275%, 220%, and 600% on three separate accounts last year…
… and it was pretty simple… I stuck to the strategies that working for me, looking for moving average crossovers, bullish price action… and of course, sticking with my 5-step plan to building small accounts.
That said, let’s take a look at how I scan for penny stocks to trade, and what I’m watching next.
Stick With What You Know
For the most part, I’m focused on the charts and looking for specific setups.
FLKS With A Few Bullish Indicators
For example, one stock I’ll be watching is Flex Pharma (FLKS).
Check out the daily chart in FLKS above.
We’re looking at FLKS on a previous high break of $0.60 with a potential move to $0.76 (the next high on the daily chart).
Now, the technical indicators I’m looking at are the 20, 50, and 200-period simple moving averages (SMAs).
If you notice on the chart above, we have some bullish price action. First, you’ll notice the 20 SMA (the blue line) crossing above the 200 SMA (the green line), which is considered a bullish crossover.
Not only do we have that setup, the 20 SMA (blue line) is looking to cross above the 50 SMA (the red line) – another bullish indicator.
The specific price action I’m looking for here is a higher high and higher low pattern to stay above the bottom trend line at $.52 per share – using that as a stop (the green uptrend line in the chart below).
Now, if you don’t know the power of moving average crossovers and how to use them for entries and exits, read this post here.
RGSE – Bull Flag Setting Up
The next stock I’m keeping an eye on is Real Goods Solar (RGSE). Now, we’ve had a recent runup with solar stocks, as you can see in the Invesco Solar ETF (TAN).
With a strong runup in the sector, it could drive some solar penny stocks like RGSE.
Check out the daily chart here in RGSE.
RGSE is on a short-term bull flag breakout here, as it traded over $0.30.
If you don’t know what the bull flag pattern is… we’re simply looking for the stock to run up, followed by a period of consolidation, before it makes its next move higher.
Now, the next levels to watch are previous highs at $0.34… then the 200 MA (the green line) at $0.36s. If this trade works… this could set up for a possible 20% runner. The stops-loss here would be just above the recent low of $0.25 per share.
Additionally, we’re seeing RGSE run higher on volume, which is a very good sign.
The next stock I’m watching has one of my favorite setups – the consolidation.
Nobilis Health (HLTH) Consolidation Pattern Setup
If you don’t know yet, with the consolidation setup… I’m looking for a steep drop in the stock price, followed by a period of consolidation (range-bound trading).
Here’s a look at the daily chart in HLTH.
This stock has been beaten down, but found some support, and looks like it could start to run higher.
I really like this play off the $0.14 base (the lower blue horizontal line), which is a support level.
Now, the stock broke above the blue line (the 20-day SMA)… a bullish sign. Not only that, we have the 50-day SMA above at $0.20, which is one of the target levels.
If HLTH breaks above that red line… I think the stock could gain some momentum and get to $0.235… and if it gets above that the next target is around $0.277 (previous highs).
If you look at the chart below, the green horizontal lines are the profit targets if HLTH breaks above the 50 SMA (the red line).
Not only are we seeing the stock start to bounce… there’s an uptick in volume.
That’s it… those are my top three penny stocks to watch.
If you like getting watchlists like these… you can receive them in an email along with video explanations of the thought process behind these setups, and so much more… click here to get started.
Now, if you’re just starting out trading and don’t know a whole lot about the markets and penny stock trading… I actually wrote an eBook about that to get you started, click here to claim the Stock Trading Starter Pack.