4 Penny Stocks To Trade Or Fade Before The Opening Bell
Penny stocks are high-risk/high-reward, that’s a given. But are you familiar with premarket trading? If you’re new to trading, you may not know what time the market opens. While most will start trading “at the bell,” there are ways to trade both before and after the stock market officially opens.
This is called “extended hours trading” and one of the ways to find premarket or postmarket “gappers”. These penny stocks and blue-chip stocks are ones trading higher before or after the regular stock market hours.
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The issue for some is getting caught up in the hype of that momentum. Due to limited access, even though volume may seem high, it isn’t totally reflective of a “regular market”. For this reason, we see traders who try to buy right at the open in an attempt to take advantage of the apparent momentum. There’s the issue however. When the market opens for a gapping stock, there’s an opportunity for sellers to come in and profit from the “overnight” jump in price.
Penny Stocks To Trade Or Fade?
Think about it. If you owned shares of penny stocks under 20 cents and the next day they were trading at 40 cents, would you continue holding your entire position? Chances are that you’d at least sell some. If selling overtakes buying, we see a flush. This usually stems from selling pressure taking the price low enough to trigger stop orders, then the rest is history.
We saw this happen on Thursday with one penny stock, SLDB. However, there are other cases where shares continue even higher after the market opens. This was clear with stocks like SPI and SUNW last week. In either case, premarket trading trends can actually change dramatically once that bell rings. With that in mind, are these going to be penny stocks to buy or wait on for Friday?
Penny Stocks To Buy [or wait]: Xtant Medical Holdings Inc.
Xtant Medical Holdings Inc. (XTNT Stock Report) was moving strongly after-hours on Thursday. This news came after the company completed its previously announced debt restructuring transaction.
“We are pleased to have completed this debt restructuring transaction, which significantly reduced Xtant’s total indebtedness to less than $16 million under our credit facility, lowered our cost of debt to more serviceable levels, and will allow us to focus on further improving the Company’s operating model and growth profile,” said Sean Browne, President and CEO of Xtant Medical.
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As a result of the deal, the fund affiliates of OrbiMed Advisors LLC own 94.5% of Xtant’s outstanding shares. While this transaction essentially could give Xtant a new lease on life, it doesn’t give all other shareholders much control. Needless to say, the market has taken favorably to this latest development. The company has had a tough year already so it will be interesting to see if this trend continues into the rest of the month or if premarket momentum fizzles out by the end of the week. Where do you stand?
Penny Stocks To Buy [or wait]: NovaBay Pharmaceuticals
NovaBay Pharmaceuticals (NBY Stock Report) and other PPE stocks are experiencing momentum during premarket trading on Friday. New that U.S. President Donald Trump and the first lady contracted COVID has put a focus on prevention products.
Since March, NBY stock has been on the move. It has now jumped from around $0.30 to as high as $1.85. Initially focused on for its KN95 face mask, NovaBay attracted attention as one of the “epicenter penny stocks“. What’s more is that The company’s the launch of Avenova® on Walmart .com brought more attention to NovBay’s product lineup. The unique part about the facial sanitizer is that it was confirmed through independent laboratory testing to kill the SARS-CoV-2 virus on hard surfaces. Avenova, used since 2015 for eyelid and eyelash cleansing, is FDA-cleared.
Last week the company reported that it engaged PartnerCentric, Inc. for affiliate marketing programs and HVM Communications for enhanced public relations featuring consumer-oriented, lifestyle messaging.
“Since engaging PartnerCentric only days ago we are already having success in gaining awareness of Avenova through websites featuring banner advertising and postings, with an impressive uptick in our website traffic. Our public relations activities with HVM Communications resulted in yesterday’s national network television segment on NBC’s Today show,” said Justin Hall, NovaBay’s CEO. NBY stock has climbed during premarket on Friday. However, due to the increased selling pressure, this has historically seen, can the trend persist during the regular session?
Penny Stocks To Buy [or wait]: Lonestar Resources
Shares of energy stocks have certainly been in the spotlight recently. Lonestar Resources (LONE Stock Chart) is on the move, early. There weren’t many new headlines to speak of directly related to LONE stock. However, the recent focus has been on the company’s bankruptcy proceedings. Last month, Lonestar announced that it reached a deal to restructure under Chapter 11.
The Wall Street Journal reported that “Lonestar Resources US Inc. has become the latest shale driller tipped into bankruptcy during the coronavirus pandemic and will seek to implement a prenegotiated restructuring plan to trim about $390 million in debt and hand control to its bondholders.”
Such has been the case with many oil and gas companies this year. Lonestar joins a growing list of companies looking to reorganize this year. COVID-19 has put a dent into the armor of the industry in 2020.
“We have carefully considered our options in the unprecedented environment faced by the energy industry and concluded that a consensual restructuring is in the best interest of the Company. In combination with our efforts to meaningfully reduce our capital and operating costs, the significant reduction in leverage that this transaction will afford the Company will position Lonestar to be highly competitive going forward,” said Frank D. Bracken III, Chief Executive Officer of the company.
Penny Stocks To Buy [or wait]: Chembio Diagnostics
Chembio Diagnostics (CEMI Stock Report) is another one of the penny stocks that gapped up during premarket hours on Friday. CEMI stock closed just under $4.90 putting it at the higher end of the penny stocks spectrum. There weren’t any moves during aftermarket trading on Thursday. This morning, the company announced that the FDA approved its Premarket Approval (PMA) application for the DPP HIV-Syphilis System.
Richard Eberly, Chembio’s President and Chief Executive Officer said, “We would like to thank the FDA for their effort throughout the approval process. This expansion of our product portfolio aligns directly with our diversification into high-value testing areas in the United States. Under the PMA, the DPP HIV-Syphilis System is approved for use by trained professionals in point-of-care (POC) and laboratory settings to aid in the diagnosis of HIV and syphilis infections. Activities to pursue a CLIA Waiver are ongoing.”
CEMI stock was a big winner during the first quarter of the year. Coronavirus had just begun to hit the stock market scanners and CEMI stock traded around $3.20. We got to watch, first-hand how COVID-pandemonium helped trigger a momentum-fueled run to highs of $15.89. This time around, the focus is being placed on Chembio’s main pipeline treatments. Will it be enough to see this multi-week uptrend continue into the weekend?
