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Forums > Penny Stocks Stocks below 5 > Penny Stocks on the Move Navigation:
  • SPMI(1) Replies

    Bronze Member
    Join Date:02-19-2014
    Saint Marys, Georgia
    United States
    Posts: 3
    Replies: 1
    SPMI2/19/2014 11:25:21 AM
    I think SPMI will post great gains. They are building new locations in Georgia and are about to start a new marketing campaign. I think it is good for a short term investment. But, I'm totally new to this. Any input? Got in at. 0095
    • My SPMI Evaluation 02-20-14(0) Replies

      STW Team
      Bronze Member
      Join Date:01-01-2014
      El Paso, Texas
      United States
      Posts: 3
      Replies: 1
      My SPMI Evaluation 02-20-142/20/2014 3:29:55 PM
      My first comment which is a very difficult concept for most beginning traders is that you got in AFTER the stock had dropped significantly.  Most new traders jump in at the TOP and then lose all there money quickly because they don't understand the "flow" of stocks.  Stocks will rise and fall in a relatively predictable pattern.  Is there ever a "sure" thing...NO.  But, if you start to watch the movement of stocks you will see that they move up and down in a continuous fashion. A trader that can begin to see the pattern and be patient enough to wait for the right opportunity can create a fortune for his future.  Congrats on this trade....right or wrong, you got in at a point where there is little downside and a lot of upside potential.

      That being said, let me tell you what I see.....

      Personally I never play stocks that are under $0.10 because the spread (distance the ask and the bid price) is usually such a high percentage of the stock's value and it is very easy to lose a lot of money quickly.  Anyway, you are already in the trade so let me give you my analysis for whatever it's worth.

      I like to always start my analysis on a WEEKLY chart to get the overall direction of a stock.  This is the weekly chart:

      The high back in October is right under $0.09.  Poor fool who purchase this stock at $0.09 just to watch it fall to less than 1/2 a cent.  Wow, a total loss.  But you were smart (most beginners just don't know any better).

      The first question to ask yourself:  IS THE STOCK IN AN UPTREND?  Never, never, never buy a stock that is in a down trend because even though it may be up today, the trend is down and so the stock may continue down.

      What is an UPTREND?  An up trend is defined by HIGHER HIGHS and HIGHER LOWS.  What does that look like on the chart?  First the lows:  notice the low back in December 2012 at like $0.0025.  Now notice the next significant low occurred in May 2013 at about $0.0050.  Is the second higher than the first?  YES.  Now, it looks to be making another low (still need the low to be confirmed by it starting back up) at around $0.0091.  Is that higher then the low from May?  YES!

      Now the highs:  Notice the high in December 2012 at around $.0194, then look at the high in September 2013 of just under $0.09.  Is the second high higher than the first? YES, like 463% higher!  So if it actually does turn upward now, it still complies with the Uptrend Rule--higher highs and higher lows.

      A couple other things I look at on the weekly chart are:
      1.)  RSI (above chart) is well below 50 and getting to the point of being "oversold" meaning there has been and end to the downward move is close at hand.

      2.) MACD Histogram (below chart in light blue graph) has reached its bottom and is now starting to move upward.  This is also an indication that the stock has been oversold and should start to move up.

      3.) One other thing on the weekly chart (will discuss the daily chart in another post)...notice how far below the moving averages the current price is.  Price is currently extended way below the moving average lines.  At a minimum, the stock should rebound at least to hit the lowest of these lines over the next few weeks.

      All indications on the weekly chart show that you made a good least the odds are in your favor to make a good return on your investment.  I will continue my analysis of this stock looking at a daily perspective.