Examining Penny Stocks with Technical Analysis for May 2022

Technical analysis (TA) involves the careful study of a stock's chart patterns and trends. Although this set of skills may seem daunting at first, even beginners can incorporate a few select TA methodologies into their investing strategy to great success. TA can be especially helpful when predicting the movements of penny stocks because of their volatility—provided there is enough trading volume to back up the patterns you're trying to find.

Below, you'll find a list of some penny stocks with interesting technical setups. Remember to move quickly and exit your position if the stock isn't behaving how you expect it to, because this may mean that the trend or signal has changed or failed.

Some of the setups described below may no longer be relevant or intact as of when you read this article. Please conduct your own due diligence. Many stocks mentioned here were also discussed in the Peter Leeds newsletter. Leeds may own shares in some of the investments mentioned, in which case that fact will be clearly indicated. Please note that penny stocks are notoriously volatile.

New Stocks to Watch

Engine Gaming & Media, Inc. (GAME)

After 12 negative candles during the latest 16 days, the weak hands have been getting shaken out. During the past three trading days, Engine Gaming & Media, Inc. (GAME) shares have shown their first significant upward momentum, ending on Friday, April 29, with a very bullish candle (whereby the shares gapped up and then closed at their high for the day).

Trading on Wednesday, April 27, may have marked the absolute bottom for the shares, where the chart formed the second day of a three day set-up, which formed the very bullish morning star pattern. While trading volumes are low for shares of Engine Gaming & Media, which should reduce your reliance on any TA patterns, the shift to a bullish bias is unmistakable.

Share price performance of Engine Gaming & Media, Inc. (GAME)

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GiveMePower Corporation (GMPW)

Investors have been rejecting prices below 70 cents for GiveMePower Corporation (GMPW) stock, aggressively buying up shares every time they dipped. Same-day recoveries are becoming commonplace lately, making long-legged dojis appear on seven out of the latest eight straight days.

The trading volume represents either fresh accumulation or buy-the-dip bargain hunters pulling more GiveMePower shares into their portfolios. Demands for the shares are outpacing any seller liquidations.

The result has been sideways trading, with a slight upward bias. The good news is that shareholders recently saw the price range go from 40 cents to 60 cents, increasing to where the GiveMePower stock sits at the time of writing, between 70 cents and 85 cents.

Share price performance of GiveMePower Corporation (GMPW)

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Twin Vee PowerCats Co. (VEEE)

Few things "coil a stock like a spring" more than a tight consolidation after a price decline. Shares of Twin Vee PowerCats Co. (VEEE) topped out at the end of March for $4.25 and now are strengthening in a range-bound $3.55 to $3.65 area, which has seen six straight days of sideways activity.

A bullish morning star pattern was negated over the two subsequent days by a bearish evening star pattern, which was then negated in kind by a sudden sideways consolidation. The more days the current sideways trading lasts, the stronger the implied breakout becomes, and the higher price of the short-term bounce.

Interested investors may want to watch this one closely to see if the trend continues to consolidate. Ideally, the trading volume would be much higher, and a spike in those activity levels can sometimes indicate the beginning of a price move.

Share price performance of Twin Vee PowerCats Co. (VEEE)

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Muscle Maker, Inc. (GRIL)

After a decline from higher prices, any trading activity that implies indecision among investors should be considered a bullish indicator. During the final week of April, Wednesday, Thursday, and Friday all showed a shift in the mentality of traders regarding Muscle Maker, Inc. (GRIL), with downward trading changing into sideways weak/imperfect spinning tops and a weak/imperfect doji.

In other words, look for trading volume to pick up, as shares are held above 40 cents. Any selling will be met by new and current investors. Eventually, a falling stock price turns into an upward climb once the average bias turns from net sellers to net buyers.

Share price performance of Muscle Maker, Inc. (GRIL)

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Article Sources

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  1. U.S. Securities and Exchange Commission. "Investor Bulletin: Microcap Stock Basics (Part 1 of 3: General Information)."

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