Hot Penny Stocks &#8211; Technical Basis Of Penny Stocks

Hot Penny Stocks: Weekly Insider List Of BEST Penny Stocks CLICK HERE

7Dec/090

Hot Penny Stocks – Technical Basis Of Penny Stocks

Make $3835.62/Day Like Me!
Copy my trading strategy that turned $1000 into $1.4M in 13 just months. CLICK HERE

Technical Basis Of Penny Stocks

Through trading I have learns many different ways to trade. The topic I will focus on is trading penny stocks with the technical aspect. Here are 10 things to help you in making trading decisions on a technical basis.

Background Information - Check the major averages and market sector. It is important to also look at the technical picture for the average(s) of which it is part--if available, and examine the market sector chart.

Look at all time frames - Daily, weekly, monthly and beyond. Study longer term charts, volume, and indicator patterns before making any decisions based on the daily charts. Look at the daily chart and indicators, if trading on an intraday basis.

Trend Considerations - Examining whether there is a trending or consolidation pattern apparent on the char. Basically, this is always having an eye as to whether the market is trending up or down, versus being in a sideways consolidation or trading range. If in a trading range, is it well-defined, wideranging or relatively narrow, and how long has it gone on? For example, is its duration as long as the prior trend in terms of weeks and months? When a consolidation has gone on as long or longer than a prior price movement of a similar nature, be alert for any trend change.

Overbought/oversold considerations - Long and short-term. As a further technical backdrop, it is recommended to be aware from day to day or week to week, of the relative position of price momentum oscillators like RSI and MACD for daily, weekly, and monthly timeframes. Be aware if the market or stock is approaching an overbought or oversold extreme, whether momentum up or down has been strong, or has slowed significantly. If an extreme reading is at hand or if momentum measured by these indicators has stalled, then it's imporant to follow the price and volume patterns closely for signs of a reversal, while keeping in mind that there are many consolidations along the way in a trend. A sideways trend bears watching in terms of protecting existing profits if the high of the price range already got near price objectives. It may be time to take profits or raise protective stops.

Predictive Patterns - Price and volume. Make a determination of what patterns, if any, are developing, such as rectangles, flags, t
1000
riangles, double bottoms, double tops, and so on with a possible measurement of an associated minimum upside objective. Volume is something to look at along with price, to determine if the volume pattern is confirming price action or not.

Trendlines and price channels - Construction of any relevant trendlines and price channels is very basic to effective technical analysis and a study of the trend, even if you merely use a straight edge to make more of a mental check of where trendlines are forming or get pierced. While not an everyday occurrence, a return to a previously broken trendline often offers a second opportunity for a trade or investment entry.

Retracement calculations - For the markets and individual items you follow, calculations for any return or rebound of 38%, 50%, or 62% of a prior price swing is essential. A strong move that retraces more than 62% up to two thirds or 66%, often suggests that momentum will carry back to the prior high or low.

Moving Averages - It is suggested that you keep track of some of the basic and key moving averages, such as the 21, 50, and 200 day moving averages. These can help confirm other indicators regarding a current or upcoming trend.

Oscillators - Another frequent check is of the relative position of at least one of the popular oscillator-type indicators like RSI, slow stochastics, or MACD on both daily and weekly or monthly chart basis. This is more than just seeing if they are at an extreme (overbought or oversold), as oscillators are a basic indicator of price momentum. On daily charts, I especially keep track of the RSI indicators with a length calculation of either 13 or 14 and 21 days as well. On weekly charts check the MACD oscillator.

Divergences - One of the great values of the oscillators, and volume indicators as well, is to highlight points when they diverge from price action, such as failing to accompany prices to a new relative high. This type of divergence is much more crucial when the market has been trending for a long period and is, or has been for some time previously, registering an extreme. Such divergences are not by themselves indications to buy or sell, but alert you to a possible reversal. This situation should then cause you to check where key trendlines or moving averages would be violated. Surprise often is the enemy of quick market action, as there is initial disbelief in a reversal. Preparedness is important.

Article Written by Dave of Stockhideout.com Best Penny Stocks

By: rob rens

Article Directory: http://www.articledashboard.com

Dave of Hot Penny Stocks, and stock message board

Click the XML Icon A
1000
bove to Receive Finance Articles Via RSS!
Additional Articles From - Home | Finance

Save Money by Using Food That Normally Goes To Waste
Kansas City Used Cars - Is it Easy To Get Financing For One
How you can prepare for the future with Individual Savings Accounts
Merchant Cash Advance: Ingredients for Success
Shopping For Business Banking Services
Debt Relief - Common Sense is Your Biggest Asset in Your Battle Against Debt
Debt Relief Advice - Banks and Financial Institutions Are Not Your Best Friends
Debt Advice - Where to Locate Free and Professional Debt Advice Online?
Annuity Quote and Managing Your Money
Top Advice on Types of Annuities

Penny stocks can be defined as those stocks which trade below $5 per share. There are some regulatory agencies which often classify them as a stock with a price below $2. But, generally speaking, a penny stock is a stock trading below $5 and only trades on one of two exchanges; the Pink Sheets or the OTC Bulletin Board.

Penny Stocks can prove risky, but it can also offer great opportunities for the investors to generate lot of money. No-doubt it is very risky, but it offers great opportunities for the investors to generate a lot of money. If the investors know their objectives then there is a possibility of winning some good money in a short period of time. For the Penny stock investors, a good investment advice and right tools help can help to survive and make a lot of money.

Below are some of the features which can help investors to gather essential information about a company prior to investigating in them.

- Stock Structure: OS (Outstanding Stock and Float) and AS (Shares Authorized)

- Valuationand Position of the Company

- SEClisting

- TurnOver and Financial record

- Transferagent transparency

- BusinessStructure

Take for example, if the company maximizes the OS and closes to AS then it means that there is no dilution in stocks.

Generally speaking, people think of penny stocks as a poor investment. However, it can be a rewarding investment because you are investing in those companies which are on the poised of making huge gains. Using pennystocks you can make a lost more money as compared to blue-chip stocks.

Before you actually plan to invest into penny stock you must do your research. You should find out how many shares the company has in its float. The float is the numerical number of shares which are currently being traded. Companies which are listed on the Pink Sheets usually do not make this report public, but with a little research, you can easily find out. It is usually mentioned in articles written about the Company trading penny stock or in TV or radio interviews with company officials. This information can be found of various websites.

Once you make up your mind, an investor has to decide the entry point and execute the stocks in an appropriate way. You must analyze the trading chart for a few days as it will offer valuable information.

Penny Stock Pick Alert is a leading Penny Stock website which gives free stock alerts to investors who are planning to Buy Hot Penny Stocks on the move and planning to make money in the penny stock market.

Make $3835.62/Day Like Me!
Copy my trading strategy that turned $1000 into $1.4M in 13 just months. CLICK HERE