The world of penny stocks is a fast and furious place where investors are sure to be kept on the edge of their seats. It’s certainly not for everyone but from time to time technical setups come into play that greatly increases the odds of a successful trade. Timing entries and exits correctly is crucial and understanding where key support and resistance levels play a big role in this.
Here are three examples of companies that look to be on the verge of breaking out and are worth adding to your watchlist.
Organovo (NASDAQ: ONVO) is an early-stage biotech with a market cap of just above $100 million. They’re headquartered in San Diego and are focused on developing 3D bioprinting technology, which can create human tissue, for medical research and therapeutic use. Shares had their heyday in 2013 but are starting to poke their head up again.
After putting in a solid double bottom around the $0.20 mark last March, they’ve rallied more than 300% and are close to their 52 week highs. It hasn’t been a one-way ride however as shares gave back almost 50% of their value in May and June. Still, this makes it the current pop all the more healthy as the stock has put in an attractive higher low which offers a new support level. As it continues to make higher highs this week, the initial target to watch for is May’s high of $0.93 and then 2018’s range of around $1.20.
Turquoise Hill Resources (NYSE: TRQ)
Turquoise Hill Resources (NYSE: TRQ) is a Canadian mining and exploration company that has stakes in gold, copper and uranium mines around the world. It’s worth noting that one of their largest shareholders is mining behemoth Rio Tinto.
Shares have been rising steadily since March and as of Tuesday’s close are up 200% over that period. There’s a solid uptrend supporting the five-month rally which offers investors an easy place to work an entry. They’ve almost filled in the gap from last July’s drop which would open up a move towards the $1.20 level.
The big thing to watch for here is the stock’s Commodity Channel Index (CCI) which measures the deviation of a stock from its previous 20 closes. The last four times it’s CCI has broken above 100 the stock has gone on to quickly jump anywhere from 30-70% and it looks like it’s on the verge of doing that again.
Vista Gold Corporation (NYSEAMERICAN: VGZ) is another mining-related stock that’s gathering momentum as gold continues to push for all-time highs. Shares have rallied 160% in a very orderly manner since Q1 and have been consolidating in recent weeks. This kind of sideways action after a strong move can do a lot in terms of cementing the new share price and gives investors a good line of support to work around as they start getting involved.
That support is around the $0.80 mark and in recent weeks shares have ranged from there up to $1.00 which is where they met resistance and fell back last August. This will be the initial fence they must jump. If they can break above those highs, it’s easy to see them moving up towards $1.50 from there, especially if gold keeps rallying.
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