Recent small-cap and biotech breakouts reflect increased risk appetite for more speculative plays , including single-digit stocks that have been routinely ignored by hedge funds and retail investors since the November election.
This price zone naturally divides between two opposing market themes. First, it is overloaded with beaten-down stocks grinding through basing patterns after steep downtrends , hoping to regain favor with the investing public. Newer issues comprise a second and smaller group that is listing for the first time or advancing from the pink sheets due to growing revenues or bullish stories that attracts investor interest. Penny Stocks to Watch for October Traders should manage position size when trading low-priced equities because frequent secondary offerings can end nascent uptrends , stopping them dead in their tracks.
In addition, it is important to watch out for sweetheart deals that offer hedge funds preferred shares while diluting common stock value. These common hazards also tell risk-conscious market players to maintain relatively tight stop-losses to limit their bearish impacts.
The stock ticked higher into January and took off in a strong uptrend that eased into a rising channel in February.
The stock rallied into the IPO opening print in May and dropped into a rounded consolidation pattern, ahead of an August breakout that has now reached the high blue line. A breakout will open the door to the double digits, while the red-hot semiconductor sector offers a stiff tailwind for outsized gains. Adesto Technologies Shows Strength: The stock returned to the high in July , broke out into August and is now trading at a five-year high.
Biotech's Breakout to Start in the Fourth Quarter. It tested that resistance level in , and , but it failed to break out while posting a higher low after each rally wave. A bounce since that time has reached within three points of resistance. Strength Seen in Camtek: Single-digit stocks are attracting aggressive capital these days, with many issues engaged in strong uptrends. Traders should look for this speculative fervor to continue into , likely lifting these stocks to multi-year highs.
For additional reading, check out: Cheap Stocks Can Be Deceiving. The author held no positions in the aforementioned securities at the time of publication.
Dictionary Term Of The Day. How much a fixed asset is worth at the end of its lease, or at the end of its useful Broker Reviews Find the best broker for your trading or investing needs See Reviews.
Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education. A celebration of the most influential advisors and their contributions to critical conversations on finance. Become a day trader. No thanks, I prefer not making money. Get Free Newsletters Newsletters.More...