Playing the Penny Stock Patterns

Solid earnings season numbers continue to be a driving force on Wall Street, giving investors some protection against the barrage of poor economic data that’s been spilling out of thinktanks and government agencies over the course of the last couple weeks.

But while the market remains tumultuous for most investors, we’ll capitalize on under-the-radar movements in the penny stock world to attempt to find gains this month.

In case you’re not familiar, each week, the Penny Sleuth takes a look at a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

As usual, while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we’ve opened the comments up to readers again this week, giving you the chance to offer up more speculative penny stock plays.

Check out the comments after this article to get a glimpse at a slew of new user-submitter penny stock picks – and the chance to submit your own!

Horizon Bancorp (NASDAQ: HBNC) – I wrote to you last week about this potentially bullish banking stock. Shares of Horizon Bancorp have been forming a very appealing ascending triangle pattern for several months now, and a breakout could be imminent the next time this stock tests its $23 support level. Again, don’t buy shares until $23 gets confirmed…

Synaptics Inc. (NASDAQ: SYNA) – Synaptics is a small-cap customer computer interface developer that was also featured in a previous watchlist for its potentially bullish ascending triangle formation. Shares need to stay above $33 for this pattern to trigger. Don’t go long until they do.

Hudson Highland Group Inc. (NASDAQ: HHGP) – Hudson Highland Group is a staffing firm based in New York. The company has been struggling with paper-thin margins of late, and shares have tumbled nearly 15% this year. But they could be headed much lower thanks to a head and shoulder pattern that looks like it’s playing out.

AXT Incorporated (NASDAQ: AXTI) – Shares of this small-cap semiconductor play broke out of their uptrending trading channel last week. Since then, AXT’s prices have been consolidating for an upward push. They could make their first moves higher this week.

Share Your Penny Stock Picks…

Once again, we’re going interactive this week…

Just post your best penny stock pick in the comments section of this week’s Watchlist by Friday, August 13.

[Independence Note: Unlike scores of other penny stock resources, we’re 100% independent from the companies we talk about in the Sleuth – that means that we never accept compensation in exchange for profiling a company, and our editors never own a position in any stocks they talk about.]

Cheers,
Jonas Elmerraji
Managing Editor, Penny Sleuth

August 9, 2010

Playing the Penny Stock Patterns was originally featured in the Penny Sleuth. Check out Wall Street’s 5 Most Profitable Penny Stock Patterns Report.

This story was originally featured on Penny Sleuth.

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