Currently, there are numerous price drivers and global macroeconomic events that are generating uncertainty, and thus stoking volatility: Iran, trade wars, the South China Sea, approaching debt ceiling limits (again), and massive power grid blackouts.

As just about any short-term trader will tell you, volatility is always welcome. Most of the various events (many of which are discussed on the Peter Leeds YouTube channel) will only become more significant by the week.

Below, you will see some of the stocks (trading for less than $5 each) that we anticipate may see some impressive short-term moves in the coming weeks.

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.

Penny stocks are volatile and can generate catastrophic losses. Price levels in this article are hypothetical and do not represent buy recommendations or investment advice. Keep in mind that it's your responsibility to make trading decisions through your own skilled analysis and risk management.

StealthGas Inc. (GASS)

For the past two months, StealthGas Inc. (GASS) stock has demonstrated higher and higher lows. A recent significant single-day decline, from as high as $3.47 all the way down to close the day at its low of $3.22, has paved the way for numerous bullish days in its wake.

Prices have been pushing higher since that big decline on June 21. On each subsequent day, shares opened right where they left off and just resumed their recovery climb.

Until StealthGas shares begin demonstrating that this upward momentum has come to an end, we would anticipate that the bullish move will continue. The trend will be your friend with StealthGas stock, until it gives you reason not to trust it any longer.

Chart showing the share price performance of StealthGas Inc. (GASS)

Lifeway Foods, Inc. (LWAY)

After any dramatic price spike, you will invariably see some profit-taking sales. This is exactly what Lifeway Foods, Inc. (LWAY) stock has been dealing with lately, after tapping against the $4.00 price point (which is likely becoming resistance).

However, we see these few days of sales as only a breather during a significant re-pricing of Lifeway Foods shares. Once the weak hands take their gains by selling, we expect the strong uptrend to resume.

Consider using the $4.00 resistance level as a gauge – IF and when it breaks above that price point, the next stop may be 15% to 25% higher. However, if it fails to break out, it would be better to do nothing with this investment.

Chart showing the share price performance of Lifeway Foods, Inc. (LWAY)

Barnes & Noble Education, Inc. (BNED)

I don't like suggesting Barnes & Noble Education, Inc. (BNED) for a short sale, since the company is kind enough to have my books on its shelves. However, I can't ignore the dark cloud cover (DCC) pattern that formed on the chart between two days ago and yesterday.

Typically, a DCC suggest that sellers are taking over and that the stock will begin declining in price. Some will want to wait for confirmation (which would be further price declines tomorrow) before acting on the set-up.

A DCC pattern is often followed by several days of tumbling prices. However, in the event that shares rise from here (at all), then you may be best served to consider it a failed pattern and exit the trade quickly.

Chart showing the share price performance of Barnes & Noble Education, Inc. (BNED)

Fitbit, Inc. (FIT)

You know Fitbit, the product. Now get to know the shares as well. This stock has done little except decline for four straight months. While you shouldn't "try to catch a falling knife," there have (finally, and only now) been signals that Fitbit shares may stop their bleeding.

Oversold? Yes, but nothing too extreme. Down a lot from the recent high in February? Yes, Fitbit stock is about 40% lower now. 

However, neither of those would be a reason to buy. What got our attention was the "misplaced hammer pattern," which formed YESTERDAY. We say "misplaced," because ideally shares would have gapped down to the signal, and they did not.  Other than that, the candlestick chart showed a near perfect hammer pattern, and that is one of the more bullish signals you'll see.

The hammer often leads into a very significant and long-term uptrend. Some traders may want to consider getting involved with Fitbit stock based on the signal – just protect your downside by possibly jumping ship if shares fall below about $4.25 or so.

Chart showing the share price performance of Fitbit, Inc. (FIT)

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.

Yuma Energy, Inc. (YUMA)

Yuma Energy, Inc. (YUMA) is incredibly risky, which may be why the shares are trading right now at only 18 cents. After tumbling from a blow-off top in April that saw shares spike to 57 cents, Yuma Energy has shrunk as low as 15 cents (yesterday).

That may turn out to be a double bottom, as that was also the price point shares bounced off two months ago. Add to that, today was one of only two bullish days in the past month.

Yesterday and the day before formed a "rising sun" set-up on the candlestick chart, which is typically bullish for share prices. There are millions of shares traded per day, which means that there is plenty of activity to increase the odds that technical analysis patterns can be trusted.

Chart showing the share price performance of Yuma Energy, Inc. (YUMA)

ImmunoGen, Inc. (IMGN)

With ImmunoGen, Inc. (IMGN), trading volume is very strong (to the tune of about 4 million shares traded per day). Recently, six bearish candles in a row led to a couple of strong up days, demonstrating that the bulls are rejecting these low prices for ImmunoGen shares.  

In fact, over the past three days, each day's low was about at $1.80 (give or take a penny). However, given the strong push higher behind the weight of millions of shares traded, buyers are back in control, after a drop off a cliff from above $3.40.

Chart showing the share price performance of ImmunoGen, Inc. (IMGN)

J. C. Penney Company, Inc. (JCP)

You’ve probably heard about this one – certainly the business, but also likely about how poorly the stock has performed over the past three years. In the past month, we've seen the first sign of life, as J. C. Penney shares broke out of their multi-year decline.

Shares may have bottomed at the end of May, which was also during the depths of the retail apocalypse. The stock rose from an 80-cent low to $1.25, but since then, the shares have weakened a slight bit. 

This may represent a buying opportunity, but first, these shares need to consolidate. If they trade sideways for at least a week or two, in the range between $1.05 and $1.20 (on higher-than-typical trading volume of about 7 million shares traded per day), you should consider the shares to be "coiling like a spring." The stronger the consolidation period, the more significant the possible eventual break to higher prices will become.

Chart showing the share price performance of J. C. Penney Company, Inc. (JCP) 

Marathon Patent Group, Inc. (MARA)

Shares of Marathon Patent Group, Inc. (MARA) may be setting up one of my favorite patterns, and an extremely bullish one at that. The trading activity over the past month may be forming a cup and handle signal – we'll know better over the coming week.

There are several stages to this complex pattern: shares drop; then they trade sideways to form the bottom of the cup; they recover beyond the previous drop; they fall back partially; then a period of sideways trading forms the handle.

The longer the handle extends, which in this case would be range-bound prices between $2.70 and $3.00, the more likely the next move will be a jump higher in prices. In addition, the more trading volume that makes up the consolidation, or the handle of the cup, the more trustworthy the pattern will become. Marathon Patent Group stock is seeing activity levels reaching millions of shares traded per day, so the volumes will be more than enough.

A cup and handle pattern often leads into a strong jump in share prices. In my opinion, if the stock declines to $2.50 or less, it should be considered a failed pattern, and you may want to be out of the trade.

Chart showing the share price performance of Marathon Patent Group, Inc. (MARA)

What's Next

One of the major events we did not mention in the intro to this blog is the uncertainty surrounding the Federal Reserve and its interest rate decisions. Most try to postulate what the Fed will do next, but sadly, it may not matter.  

Whatever the Fed does – raise rates, lower rates, print more money – It will only have a temporary reactionary impact, but no actions the Fed can take will fix the originating problems with the economy, and thus, in my opinion, will only be for show. 

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.