Penny Stocks to Buy Using Technical Analysis for May 2019

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The markets are getting more “concerning,” as debt loads (personal and corporate) increase, one of the longest economic expansions stretches on, and recession has started showing up in many nations the world over (Italy, soon Germany, etc.).

In any tumultuous time in the markets, being a short-term or swing trader always gives rise to numerous opportunities. As opposed to “going long,” or holding stocks for months or years, using technical analysis often leads to some excellent trades in just about any market.

Let’s discuss a few penny stocks that may offer attractive trading opportunities this month.

Key Takeaways

  • A penny stock refers to a small company’s stock that typically trades for less than $5 per share. 
  • Although some penny stocks trade on large exchanges such as the NYSE, most penny stocks trade via over the counter (OTC).
  • While there can be sizable gains in trading penny stocks, there are also equal risks of losing a significant amount of an investment in a short period.
  • Technical analysis techniques can help spot potentially profitable trades in penny stocks.

Centric Brands Inc. (CTRC)

After a recent tumble from the dark cloud cover warning sign at $5.35, Centric Brands Inc. (CTRC) stock displayed a very interesting pattern, specifically, seven days ago, on a candlestick trading chart, shares showed a very long lower tail. Typically, that is representative of a strong intraday recovery, which by extension implies hungry buying demand at undervalued prices.

Since then, and most specifically over the past few days, Centric Brands stock has been displaying a “calming” of the downtrend. It even formed a very imperfect hammer pattern today, and while this one may not play out as you would typically expect from a perfect set-up, it still may portend a sharp reversal into a rewarding uptrend.

China Jo-Jo Drugstores (CJJD)

This one represents a “recovery” or “rebound” play. The dark cloud cover set-up led into a complete share price collapse from which China Jo-Jo Drugstores, Inc. (CJJD) stock has never recovered—yet.

However, a price move like that almost always sees a nice 20% bounce (at least), and the timing for that move is looking to be upon us. The strongly oversold level, with a relative strength index (RSI) of less than 25, suggests that the bias going forward will be very positive. There will almost certainly be more accumulation than selling in the next few weeks. 

Viveve Medical, Inc. (VIVE)

After eight straight negative days for shares of Viveve Medical, Inc. (VIVE), it is always encouraging to see a rare positive candle. The fact that trading volumes have ballooned since the big sell-off a few weeks ago and are only now showing signs of slowing down adds to the probability that the downtrend may reverse.

Shares are also so heavily oversold that the chances of Viveve Medical climbing back higher are much more likely than the possibility of more declines. If the stock is going to pop back to higher prices, it will likely begin that recovery within a week.

Superior Drilling Products (SDPI)

I am taking a bit of a risk with Superior Drilling Products, Inc. (SDPI), considering the trading volume is so low, you will want to be extra cautious with any patterns you see on the candlestick chart. If you decide you are okay with that, let me tell you what I am seeing.

Over the most recent six days, there have been three dojis, one imperfect doji, one spinning top, and one imperfect hammer. These are all trend-reversal “suggestions” and may be telling a story that the downtrend has played out and that shares will begin a bounce right off the $1 range at which they are currently trading.

Whether my opinion/theory is correct or absolutely wrong … we’ll know within a week or less. I strongly expect $1 to be the price floor for Superior Drilling Products stock.

ShiftPixy, Inc. (PIXY)

On Tuesday, April 30, shares of ShiftPixy, Inc. (PIXY) gapped down to a great trend reversal set-up, specifically a doji pattern. This represents indecision among investors and also indicates that the next few days and weeks will see a recovery of that gap down, along with an increased probability of rising prices.

In addition, a heavily oversold RSI reading of just above 20 adds support to my expectations, as does the trading volume spike we have seen since March 15. 

Oasmia Pharmaceutical AB (OASM)

I have NEVER in my entire several-decades-long career seen this: Over the past four trading days, there have been three Morubozu candles on the chart of Oasmia Pharmaceutical AB (OASM). The Morubozu is the most bullish single-candle pattern, and, typically, if you are lucky enough to find just one, that alone would be enough to base a trade upon.

In such an usual situation, my first thought is that I am missing something. Until I figure out what that may be, which I still haven’t, I would suggest trading Oasmia Pharmaceutical shares extremely cautiously.

Something is weird here, and assuming these truly were naturally occurring candles, they are suggesting that prices are about to explode higher. Myself personally, I would walk away. The sheer weight of so many strongly bullish candles makes no sense, although the suggestion is quite compelling. Trade this one (just like with every investment you buy or sell) with extreme caution and only if you understand what you are doing and perform your own due diligence.

Novus Therapeutics, Inc. (NVUS)

Novus Therapeutics, Inc. (NVUS) displayed a hammer pattern on its stock chart on Tuesday, April 30. This implies that prices will launch into a strong uptrend in the coming day(s).

There was a gap down to the set-up on tremendous trading volume, both aspects of which add strength to how much momentum will come out when the shares start “behaving.” Look for a respectable recovery from these recently depressed prices, which may be likely to end up somewhere closer to $3.50.

Auris Medical Holding Ltd. (EARS)

A significant price decline formed a very long-legged spinning top on Tuesday, April 30, on the chart of Auris Medical Holding Ltd. (EARS). The longer the legs, the greater the degree of indecision among investors.

What this is suggesting, after the gap down and high-volume day (2,903,573 shares traded), is that the downtrend is over and that the shares will likely reverse back to higher prices. Time will tell, but these heavily oversold shares will almost certainly be feeling an upward bias in the coming week or two.

The Bottom Line

Be extra alert and quick with your trades. We are at a turning of the tide with the markets, and when shares bounce around now, they tend to do it more significantly and quickly than usual.

Are your trades going the wrong way or not playing out like your original expectations? Rip them off in one motion, like a Band-Aid. However, if your trades are cooperating with your investing view, let your gains run, rinse and repeat.

Many of the stocks mentioned here were also profiled, traded, or otherwise discussed in the Peter Leeds Newsletter. Peter may furthermore own shares in some of the investments mentioned, in which case that fact will be clearly indicated. See below for an additional important disclaimer regarding penny stocks.

Peter Leeds is the author of several books, including the international bestseller, “Penny Stocks for Dummies.” He and his team also issue a newsletter devoted exclusively to penny stock picks and analysis, as well as a popular YouTube channel PeterLeedsPennyStocks.

Source: Investopedia