A while back, Greg Guenthner wrote to you in the Sleuth about the fact that small-cap stocks were breaking down. On average small-stocks had been sliding lower since October while major names on the S&P 500 and NASDAQ Composite helped hold broad based indexes up as we edged toward the New Year. But now, small-caps have broken out above the downtrend they’d been stuck on, and things are looking up.
Improving conditions have certainly helped us with our wins so far in December. In the last two weeks, the Monday Penny Stock Watchlist has delivered gains of 207.65% on La Jolla Pharmaceutical (NASDAQ: LJPC) and 54.43% on China Infrastructure Investment Corp (NASDAQ: CIIC), giving Sleuthers the chance to book serious gains.
In fact, investing in both plays back to back would have turned $1,000 into $3,206.73 in just 2 weeks. Merry Christmas indeed!
We’re going to aim for similar gains this Monday. Each week, we take 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.
Vacations are going to be one of the biggest catalysts for stock movements this week – a short trading day on Christmas Eve and closed markets on Christmas Day could make for lower overall volume, and more pronounced gains and losses in the stocks we’re following. Watch these issues closely. 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 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 on the Penny Sleuth website to get a glimpse at a slew of new user-submitter penny stock picks — and the chance to submit your own! First, though, let’s take a look at this week’s penny stocks worth watching… Encore Wire Corporation (NASDAQ: WIRE) – While wire manufacturing may sound like a boring business, this company’s stock has been anything but boring in the last month, rocketing from early-December lows, and pulling back now to the stock’s 200-day moving average. While the pullback seems bearish, with shares right above support, and a bullish moving average crossover forthcoming, this stock could be setting itself up for another big week. Athersys Inc. (NASDAQ: ATHX) – Athersys, a biopharma therapy developer, is in the news big this morning following the announcement of a commercialization deal with drug giant Pfizer (NYSE: PFE). And while Athersys’s big move will likely scare less-experienced small-cap investors away, moves like these have found us some of our biggest gains. Watch this one closely for slowing momentum. Cost Plus (NASDAQ: CPWM) – Home furnishing retailer Cost Plus is having a tough few months. Furnishing stocks tend to move in tandem with the housing market, and the real estate bubble’s burst in early 2008 hasn’t made things easy for the industry as a whole. After tumbling more than 26% in the last couple of quarters, Cost Plus is showing few signs of slowing down its slide. Right now, the stock has broken below a number of significant resistance levels, and is forming a pennant pattern – a continuation pattern that should lead to more down days this week. Scan Source (NASDAQ: SCSC) – ScanSource is a wholesale distributor of specialty technology products that focus on data capture and point-of-sale services. And while the stock has been in an uptrend for the month of December, three key resistance levels lie within $1 of the stock’s current share price. If this stock bumps its head on those levels, a downward move should be tradable. Share Your Penny Stock Picks Once again, we’re going interactive this week… Just post your recommendation in the comments section of this article between now and the market’s close at 1:00 p.m. on Thursday, December 24 to share your favorite penny stock play with the rest of the world.
Cheers, Jonas Elmerraji