Are These Penny Stocks To Buy Today Or Avoid For Now?
Penny stocks are back in the spotlight today. After a huge move from SPI Energy (SPI Stock Report) on Wednesday, traders are beginning to remember the power of the small-cap. For the last few weeks, these stocks under $5 haven’t received the attention they obviously deserve. That may have been due to the fact that so many new concerns are arising amid growing global tensions. Needless to say, traders experienced exactly why penny stocks are some of the top equities to watch for volatile swings, big gains, and a general disconnect between broader market sentiment.
Case in point, Wednesday, the Dow Jones Industrial Average dropped nearly over 500 points or nearly 2% lower; a considerable drop for the Dow. SPI Energy, on the other hand, climbed more than 4,000% from its previous close. While shares have retreated from their $46.67 high, the fact remains the same.
Penny stocks are well-known for being big winners in short period of time. As such, most experienced traders will focus on these cheap stocks as day trades or swing trades for the most part. Now, are all penny stocks “just a trade,” no but the general rule of thumb is to capture gains quickly and move on to another trade.
There’ve been plenty of penny stocks that are good day trades and end up eventually becoming good swing trades or even investments. So, don’t get me wrong, there are scenarios for investing in penny stocks. However, when it comes to SPI or really any premarket penny stock gapping up, the risk is high but the obvious reward is as well.
How To Trade Premarket Penny Stocks
This leads me to today’s focus: Pre market penny stocks to watch. Traders will use the premarket session – the time before 9:30 AM EST when the market opens – as a gauge of sorts. When you see stocks gapping up early traders take notice and want to understand why. The important thing to remember is that just because penny stocks are high-flying before the opening bell, it doesn’t mean that trend will continue during the regular session. Like we said yesterday it’s important to not only understand why a stock is moving so much higher but to also grasp the general market risk at play.
If you owned shares of a stock “yesterday” and saw it was up over 100% “today,” would you take profit? In most cases, moderate traders would say Yes. So when you put a pre market penny stocks watch list together, it doesn’t hurt to look at previous trading sessions.
In general, you’re met with two scenarios: Either a stock gaps up and goes higher or it gaps up and falls at the opening bell. In either scenario, it might be a prudent thing to watch and wait for a trade to set up. SPI is the perfect example. When the market opened, the first 25 minutes of trading was actually a slight downward move. It wasn’t until around 10AM EST that a firm bull trend began forming. So all I’m saying is just because a stock like SPI did what it did, that doesn’t mean all penny stocks will. So keep your trading plan in mind heading into the morning. With that, are they going to be penny stocks to buy or avoid today?
Penny Stocks To Buy [or avoid]: CBAK Energy Technology Inc.
Ten days ago, exactly, we began following CBAK Energy Technology Inc. (CBAT Stock Report). The company is a lithium-ion manufacturer and electric energy provider. So, right off the bat, you can get a sense of what’s driven recent activity. The thing about CBAT stock is that it has experienced waves of momentum.
Earlier this summer, we saw the first wave in real-time as the penny rallied from under $0.50 to nearly $1.70 within just a few weeks. The stock pulled back during the early 3rd quarter and we began resisting things this month. Since September 14th, shares have jumped from $0.735 to as high as $1.49 on Wednesday. Obviously, speculation and sympathy played a heavy role yesterday.
Needless to say, CBAT stock may also be experiencing some excitement following Elon Musk’s comments on Battery Day. He discussed the need to aggressively ramp up production and that means more batteries. Gene Munster, an investor and managing partner of Loup Ventures, wrote in an analysis for the event, “To be successful, the company needs to ramp its production of batteries.”
As we look down the food chain of EV’s, companies like CBAK have gained some attention. Furthermore, other applications like in-home power has also put a spotlight on CBAK. Earlier this month that company won a bid to supply Haier Group for its Haier smart home project.
Penny Stocks To Buy [or avoid]: Polar Power Inc.
If Polar Power Inc. (POLA Stock Report) sounds familiar, that’s because it is. POLA stock has been on the radar since the end of June. At the time, shares were trading around $2 and POLA caught a monster surge to highs of $4.96 in a single day. This came right after Polar Power reported quarterly results.
Shares traded sideways for a few weeks to follow and ended up consolidating back to around $1.50, which evidently filled that previous gap between June 29th and June 30th. As energy penny stocks gained attention recently, POLA shares began steadily climbing and in sympathy, with SPI yesterday ended up going parabolic. The stock jumped swiftly from $1.70 to $3.80 and came right back down before the close.
Thursday, however, that momentum has continued across a number of tech and energy penny stocks. During premarket trading, Polar Power stock managed to reach a high of $5.40 so far. What’s important to note is that the company hasn’t released any further updates or filings recently. It isn’t surprising, though to see POLA stock trading in sympathy with other related sectors.
Its products include DC generators, Back-up DC generators, hybrid power systems, Li-Ion battery systems, and Marine DC generators. Following Tesla’s Battery Day, there’s been plenty of attention on the “food chain” for EV production. Keep in mind, however, that the company has raised money within the last few months at prices much lower than the current market’s trading at today. Will POLA stock continue higher at the open or will this become a gap and trap scenario?
Penny Stocks To Buy [or avoid]: ElectraMeccanica Vehicles Corp.
ElectraMeccanica Vehicles Corp. (SOLO Stock Report) has been no stranger to volatility this year. It was one of the electric vehicle stocks we’ve watched since June. We saw it rip to highs of $6 and dip to lows of $2.50 during that period. The initial move was triggered by rumors that ended up getting denied as true by the company. But over the course of the last few months, ElectraMeccanica has made strides of its own in anticipation of commercially launching its own EV.
Earlier this month, the company released images and video from its SOLO EV assembly line. The Company has targeted late November/early December for initial deliveries to those on its pre-order list before ramping production to meet increasing demand. Amid the attention on EV Fleet trucks from the likes of Tesla and Nikola, ElectraMeccanica also revealed a product of its own. It wasn’t an 18 wheeler by any means. But it was an upgraded SOLO EV with more storage and if you’ve seen images of this, you know it’s a very compact vehicle to begin with.
In any case, this week, not only were SOLO shares flying in sympathy with SPI stock, the company also had a catalyst of its own. On Wednesday, ElectraMeccanica tweeted a quick video clip of a white-gloved hand polishing a Solo logo on the front grill saying “The Finishing Touches On A Shiny New SOLO”. While no other news has come out, we can clearly see that excitement has built up in the stock market. SOLO shares traded as high as $3.28 during the early pre market session. Will bullish sentiment continue fueling this penny stock today?
Penny Stocks To Buy [or avoid]: Sunworks Inc.
Finally, Sunworks Inc. (SUNW Stock Report) remains on the list from yesterday. The penny stock surged in sympathy with SPI. What also helped trigger some momentum was solar power sector momentum. The solar penny stock benefited from a surge of interest following better earnings from leading solar company JinkoSolar (JKS Stock Report). Whenever a $25 stock jumps over $10 in a day, that generally builds some excitement for the sector.
Considering that this is a huge, 2-day move based on sector sympathy, can the momentum continue. Will SUNW stock be one of the penny stocks to buy or avoid once the market opens today? Shares have already managed to hit over $8 during the early premarket session.