Blue chips and big tech stocks gained more ground than small caps and penny stocks in February, but political events have kept this market corner chock-full of speculative fervor. Most importantly, the Trump administration backed off from aggressive attacks on biotech and pharmaceutical pricing practices, allowing many junior biotech stocks to attract significant buying interest
|Symbol||Company||Mar. 1 Price|
|GSV||Gold Standard Ventures Corp.||$2.61|
|ZSAN||Zosano Pharma Corp.||$2.65|
|WRN||Western Copper & Gold Corp.||$1.48|
|NAKD||Naked Brand Group Inc.||$2.16|
|ATRS||Antares Pharma Inc.||$2.51|
|EYEG||EyeGate Pharma Inc.||$2.60|
|CGNT||Cogentix Medical Inc.||$2.11|
|CSBR||Champions Oncology Inc.||$3.54|
Precious metals also booked strong results, with gold futures rising nearly 4% to a 3-month high; while the silver contract posted even stronger gains, rallying more than 7% to its highest high so far in 2017. Even so, this speculative group still has a long way to go to overcome selling pressure in reaction to higher inflation expectations and an accelerating Federal Reserve rate hike schedule.
Look for economic data and public policy to drive March’s penny stock price action. Concerns that President Trump’s infrastructure and tax reform initiatives may not roll out on an aggressive schedule has weighed on financial and raw material plays in recent sessions, so progress with those initiatives could draw capital off the sidelines and underpin the high levels of speculation needed for this market niche to prosper.
March’s watch list includes eight new entries; while retaining two picks that could post additional upside or are still grinding through bullish breakout patterns. These new and recurring picks have popped to the top of market scans that search for unusual market strength in penny stocks, with a second visual filter seeking narrowly-defined breakout or pullback levels that favor lower-risk trade entries.
The top penny stocks for March 2017 are:
1. Gold Standard Ventures Corp. (GSV)
Gold Standard Ventures Corp. (GSV) ended a vertical buying impulse at $3.05 in May 2012 and rolled over, entering a decline that finally bottomed out at 26-cents in July 2015. A recovery wave into 2016 caught fire, generating a summer rally into 4-year resistance, followed by a rounded trading range that’s still in play more than six months later. A February buying spike lifted price into the top of the range, completing a multi-year cup and handle breakout pattern that predicts an uptrend targeting $6.00 to $8.00.
GSX rolled over with a weak precious metals market in the first two weeks of March and tested short-term support between $2.00 and $2.25. As of March 13, it’s just bounced off a 5-day basing pattern, signaling a possible higher low, ahead of a rally back to the breakout level at $3.00.
2. MobileIron Inc. (MOBL)
MobileIron Inc. (MOBL) peaked at $12.96 in August 2014 and dropped a trading range that broke to the downside in April 2015. Bears kept control into the September 2015 low at $2.81, ahead of a bounce that stalled at the 200-day EMA in April 2016. It broke 2015 support in September and turned sharply higher in October, returning to range resistance one month later. The stock broke out to an 18-month high in February and is now testing new support near $4.50. Strong accumulation predicts bulls will prevail, ahead of continued upside toward $7.50.
As of March 13, MOBL has dropped back into the fourth-quarter trading range and is testing the 200-day EMA at $4.00. Accumulation has held up well during the recent downturn, raising odds for a bounce that yields a new breakout attempt.
3. Zosano Pharma Corp. (ZSAN)
Zosano Pharma Corp. (ZSAN) came public near $11 in January 2015 and entered a stairstep decline that initially found support near $2.00 at the start of 2016. That level broke mid-year, dumping to an all-time low at 45-cents in November, ahead of a bounce into 2017. The stock charged higher in February, breaking out above the 200-day EMA, after a migraine relief product candidate produced statistically significant testing results. A pullback to the moving average should reward dip buyers with continued upside that could reach $6.00 to $7.00.
ZSAN sold off to test the February low at $2.20 after announcing a $46-million common stock offering and could drop into deep support at the 50-day EMA. That level should present a low-risk buying opportunity this month ahead of a solid rally impulse.
4. Pulmatrix Inc. (PULM)
Pulmatrix Inc. (PULM) develops therapies for the treatment of pulmonary diseases. It came public above $20 in March 2014 and entered a severe downtrend that continued into the start of 2017, dropping to an all-time low at 50-cents. The stock went vertical in early February, after meeting Nasdaq exchange compliance issues, and stalled following a 950K secondary offering at $3.50. It looks like new supply has been absorbed, favoring continued upside that could eventually reach double digits.
PULM turned lower in early March and has reached deep support at the 50-day EMA just above $3.00. Look for a strong bounce to start at or near this price level, ahead of a large-scale recovery wave.
5.Western Copper & Gold Corp. (WRN)
Western Copper & Gold Corp. (WRN) topped out with world commodity markets in 2011, posting an all-time high at $4.49, ahead of a brutal downtrend that hit an all-time low at 20-cents in January 2016. The subsequent recovery wave stalled just above a buck in July, giving way to a narrow consolidation that yielded a December breakout up to $1.80. It’s been grinding sideways for the last two months and is now testing range resistance, with a breakout opening the door to an advance that could eventually test the 6-year high.
WRM continued to pull back into mid-March, reaching 3-month range support and bouncing into the new trading week. This price action has carved the next leg in a rectangle pattern with resistance above $1.80.
6.Naked Brand Group Inc. (NAKD)
Retailer Naked Brand Group Inc. (NAKD) entered into a January 2017 merger agreement with New Zealand intimate apparel manufacturer Bendon that will require new stock issuance after shareholder approval. The news ignited a vertical buying spike to $3.68, followed by a steep decline to $1.14 at the start of February. Dip buyers emerged at that level, triggering a second rally impulse that reached a 16-month high at $4.75. It’s been pulling back for the last 3-weeks and should find aggressive buying interest at or above the 200-day EMA just below $2.00.
NAKD bounced off a 2-week basing pattern at $2.00 earlier this month, stalled at $2.80 and has settled back on support. Stand aside for now and wait for another upturn because sellers could take control right here and violate the technical setup.
7. Antares Pharma Inc. (ATRS)
Antares Pharma Inc. (ATRS) develops and markets injector solutions for a variety of self-administered therapies. It rallied sharply off the December 2008 bear market low at 29-cents, reaching an all-time high at $5.58 in July 2012. The subsequent downtrend finally ended at 67-cents in March 2016, giving way to a channeled uptick that remains in force more than 11-months later. This bullish pattern predicts a buying opportunity when the price drops to $2.00 or breaks the channel to the upside.
ATRS has consolidated between the mid-February high at $2.67 and low at $2.30 in the last two weeks, filling out a symmetrical triangle pattern that should yield a rally and test at channel resistance, now located near $2.85, as of March 13.
8. EyeGate Pharmaceuticals Inc. (EYEG)
EyeGate Pharmaceuticals Inc. (EYEG) had the misfortune of entering into a worldwide licensing agreement with Valeant Pharmaceuticals International Inc. (VRX) in July 2015, just before scandal rocked the blue chip drug manufacturer. It hit an all-time high at $35 after the news and then plummeted, dropping back into single digits in August. The stock posted lower lows into November 2016 and gapped up on heavy volume on Feb. 21 after renewing that agreement. It should fare better this time around, heading toward an upside target between $5.00 and $8.00.
EYEG continues to consolidate gains after the February breakout and is holding near the midpoint of the wide range rally bar. Support at $2.50 looks solid, favoring a bounce that eventually tests the high and triggers a larger-scale trend advance.
9. Cogentix Medical Inc. (CGNT)
Cogentix Medical Inc. (CGNT) topped out in the mid-20s in 2005 and tested that resistance level in 2008. It then entered a severe downtrend that continued into the May 2016 all-time low at 71-cents. Price action since that time has carved a multi-leg recovery, with the stock recently bouncing off new support at the 200-day EMA under $2.00. Pullbacks to the blue trendline and 50-day EMA near $2.00 should be buyable, ahead of a test at the 2016 high and continued uptrend.
CGNT tested base resistance at $2.40 last week and reversed, dropping back through the midpoint of the 3-month trading range. As of March 13, it’s now situated just a few cents above major support at the descending trendline near $1.80, with that level set to offer a buying opportunity.
10. Champions Oncology Inc. (CSBR)
Champions Oncology Inc. (CSBR) develops novel technologies for oncology diagnosis and treatment. It topped out at $23.88 in 2013 and entered a decline that posted an all-time low at $1.11 in August 2016. A basing pattern into November got bought, lifting the stock into a recovery wave that broke out above the 200-day EMA in January 2017. It topped out and rolled over at the start of February, with the decline now positioned a few cents above moving average support. Look for committed buyers to take a stand here, ahead of a bounce that could new 2017 highs.
As of mid-March, CSBR continues to test moving average support near $3.00, building a base that could yield a strong bounce and test of the January high. However, it makes sense to stand aside right here and wait for other buyers to step in because a breakdown toward $2.75 will negate the trade setup.
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The Bottom Line
Junior biotechs dominate March’s penny stock watch list, with retail capital reloading positions in this speculative segment in reaction to more favorable Oval Office policy. Moving averages and Fibonacci grids stretched across vertical rally impulses should organize seeming chaotic price action, highlighting narrow entry levels that favor higher prices into April and beyond. (For more, see: How to Invest in Penny Stocks).
<Disclosure: the author held no positions in aforementioned stocks at the time of publication.>