Even before coronavirus fears decimated global equities in March, I was calling, both on my YouTube channel and in my newsletter, for a severe and prolonged recession.
Why? For one, the Q ratio had risen way above 1.0. Historically, this has resulted in a stock market decline of approximately 80%. Second, as the market veered into ridiculously overblown territory over the past few years, investor behavior was governed by greed – with not enough fear in the psychological mix to keep trading decisions rational and sensible, in my opinion.
While the Fed is dumping billions upon billions of dollars into the economy, I think its efforts will be all for naught. We won't be going back to the ridiculously bullish market of yesteryear. In this context, it's more important than ever to hone your technical analysis skills. Think of them as a valuable tool you can use to see through all the noise and volatility currently dominating the markets.
Below, I've listed several penny stocks whose technical signals are pointing to a positive turnaround in their trading patterns. As always, be sure to move quickly but thoughtfully when venturing into these plays.
Due to the time constraints inherent to technical analysis, some of the patterns, signals, and set-ups I describe below may no longer be relevant or intact as of the time you read this article. Please ensure you conduct your due diligence when looking at the trading charts and data for the following stocks.
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 disclaimer regarding penny stocks.)
Overseas Shipholding Group, Inc. (OSG)
Overseas Shipholding Group, Inc. (OSG) is blasting out a number of positive technical signals at the moment. It capped off the last week of March with a bullish Marubozu candlestick pattern, and that has been confirmed by a week of positive activity at 25% growth.
Moreover, consider that Overseas Shipholding exponential moving average (5) is an excellent $2.24, and its simple moving average (5) is $2.25, both indicating a Strong Buy opportunity. Meanwhile, its oscillators are also presenting the stock as a Buy opportunity, with the Awesome Oscillator at 0.19 and Momentum (10) at 0.32.
Titan Pharmaceuticals, Inc. (TTNP)
A multiple bottom chart pattern has appeared for Titan Pharmaceuticals, Inc. (TTNP) in the form of three bottoms within the upper $0.18 territory over 2020 so far. Shorting action is strong here, but if the bulls can wrest the power away from the bears, then this pattern would suggest that a positive trend reversal is within reach for this super-cheap biotech stock.
Roadrunner Transportation Systems, Inc. (RRTS)
Extremely high trading volume (at 11.62 relative volume) paired with a relative strength index of 18.90 suggest that Roadrunner Transportation Systems, Inc. (RRTS) is strongly oversold at the moment, and a new wave of more bullish traders may start pushing the stock to higher prices. I believe we should see a bounce very soon.
Alimera Sciences, Inc. (ALIM)
I'm currently seeing a double bottom pattern for biotech company Alimera Sciences, Inc. (ALIM), with troughs reached in mid-November 2019 and mid-March 2020. Typically, this suggests that a stock will see positive price action after a downtrend, which in Alimera's case has been a devastating 77% loss in value over the past year.
Cumberland Pharmaceuticals Inc. (CPIX)
An inverted hammer at the end of March for Cumberland Pharmaceuticals Inc. (CPIX) could signal a turnaround for the biotech company, which has lost 30% of its value over the past quarter. I do note that trading volume is not as high as it could be here, which weakens my confidence in the indicator. If the stock appears to be heading back toward the $3.50 level, I would exit the play immediately.
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.
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.