Unusual Volume Can Mean Something For Penny Stocks; What Does It Mean For These?
How do you find penny stocks to buy? Some people look for things like news. Other people invest in penny stocks with stronger fundamentals. While many traders look at things like chart patterns and technical indicators.
While these are all “tells” of potential, news can be spun, fundamentals can change, and chart patterns are based on trailing information. One thing you cannot ignore, in real-time is volume. Every stock, including penny stocks, has an average trading volume.
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If you’re reading this and saying, yea we understand stocks have volume, so what? Well, the “so what” has everything to do with changes in volume or irregularities. Let me pose a question to you. When you’re not feeling well, it’s usually because of an irregularity compared to how every other day has gone beforehand. The result is usually something along the line of you either going to the doctor or monitoring any other changes on your own.
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This is easily applied to penny stocks as well. Let’s say there’s a biotech company trading between 600,000 and 1.2 million shares a day. It’s done so for weeks and weeks. But one day you come across it as it trades over 4 million shares. There wasn’t any news and the company didn’t file any disclosure statements. What would you do? Most traders would add this to a watch list and monitor the directional movement to determine if it’s a penny stock worth buying.
Prudent traders would likely go steps further and check things like old news or filings to see if there are any upcoming events. Another thing to take into consideration is what the industry is doing. This year, when a leading vaccine company releases news, we typically see a slight pop in coronavirus vaccine penny stocks.
So, while volume alone shouldn’t be the determining factor, in my opinion, it can give a “heads up” to traders to simply begin paying attention to other cues. With this in mind, are any of these penny stocks with unusual volume on your watch list this month?
Penny Stocks To Buy [or avoid]: Adamis Pharmaceuticals
For the better part of the last week, Adamis Pharmaceuticals (ADMP Stock Report) has seen above-average trading volume in the market. Back in April, the company announced that its wholly-owned drug outsourcing facility, US Compounding Inc. increased its product mix to provide additional drugs to assist in the ongoing fight against COVID-19. This included a variety of pharmaceutical products.
The company would then later reacquire the rights to its SYMJEPI ® (epinephrine) Injection 0.3mg, SYMJEPI® (epinephrine) Injection 0.15mg products from Sandoz Inc. Adamis simultaneously entered into an exclusive distribution and commercialization agreement with US WorldMeds, LLC for the United States commercial rights for the SYMJEPI products, as well as its ZIMHI™ (naloxone HCI Injection, USP) 5mg/0.5mL product candidate. Fast-forward to the start of this month and US WorldMeds is now actively promoting both SYMJEPI products.
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Aside from that, the only other thing to take into consideration is a recently filed Notice of Annual Meeting for August. Among topics, the company is looking to effect a reverse split to its shares as well as increase its number of authorized shares. I think this is a unique situation and one to keep in mind as there aren’t many other reasons to increase the authorized share count aside from wanting to raise additional capital in my opinion. That can lead to potential dilution risk. Needless to say, the date for the is set for August so between here and there could ADMP stock continue this recent trend of unusual volume and bullish movement?
Penny Stocks To Buy [or avoid]: Digital Ally Inc.
Digital Ally Inc. (DGLY Stock Report) is one of the penny stocks we’ve watched for quite some time now. Initially, a speculative idea when riots started, DGLY stock has rallied after big corporate developments. States are beginning to put legislation in place, some of which include the use of body cams on a large scale. For a company like Digital Ally, that might be “kind of important”. For instance, the company’s body cams were spotted in a news story coming out of Kansas City. Specifically, this was a report citing Kansas City securing over $2 million for bodycams for its police.
The company has also gained some notoriety for its other “safety products”. I’m specifically referring to its Shield Cleansers. The company recently launched its eCommerce site and is essentially selling disinfectants and cleaners. The company offers other things like ThermoVu, which is a contactless thermometer. But clearly, a more “on brand” focus may center more around its digital cameras.
This week, Digital Ally shares started jumping again on above-average volume. There wasn’t any news to speak of. But there was some juicy info on the government contract site. It showed Digital Ally Inc. winning a multi-million dollar contract for “Radio and television communication equipment “. Considering there hasn’t been any formal update as of this writing, this irregular action may be from this latest development.
Penny Stocks To Buy [or avoid] AIM ImmunoTech
Shares of AIM ImmunoTech (AIM Stock Report) were recently added to the Russell MicroCap Index. The aded exposure seems to have caught the attention of a wider investor base as average volume has picked up since then. However, over the last few days, AIM stock saw much higher than average trading volumes.
Considering a “big day of volume” for AIM has been somewhere around 9 million shares, July 15th’s 24 million share day was notable. Furthermore, as of mid-day on Thursday, AIM stock has already traded more than 14 million shares. Of course we can point to the Moderna news from earlier this week but what about the second half of this week?
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The last update was from July 9th. This is when AIM entered into a clinical trial agreement (CTA) with Roswell Park Comprehensive Cancer Center. It was in support of Roswell Park’s Phase 1/2a trial of Ampligen (rintatolimod) in combination with interferon alfa-2b. The combo specifically targets cancer patients with COVID-19. According to the company, enrollment was expected to begin 30 days from that update. However, with this irregular trading activity, is there more to consider here than just sympathy from Moderna and the Roswell trial?
Penny Stocks To Buy [or avoid]: Heat Biologics
Heat Biologics (HTBX Stock Report) is another one of the coronavirus penny stocks we’ve discussed frequently. The thing about its recent move is that it has come very quickly. Since HTBX stock first started seeing irregular volume in June, shares have skyrocketed 165%. During the last 4 sessions, shares moved up over 100% alone. So in these cases, it’s very important to keep something in the back of your head.
That “something” is that nothing goes up in a straight line forever. If or when it pulls back, could it rebound? There are always chances for bounces as we’ve seen plenty of times this year with other penny stocks. But right now, HTBX stock is seeing much higher trading volume and big price movement. If you caught our update yesterday afternoon or the email from this morning, HTBX was one of the companies mentioned. Something we highlighted was a statement from its CEO in an old PR from June.
Jeff Wolf, CEO of Heat, said, “We remain on track to complete design and development of our COVID-19 vaccine in July.” He also said the company expects its gp96/nCoV-2 expressing cell line “will be available for clinical-grade manufacturing with our partner, Waisman Biomanufacturing, in early August.”
Could this be the driving force behind HTBX right now? After such a huge move, is it still one of the penny stocks to buy or to avoid/wait for a pullback? Leave a comment below with your thoughts.
