The Importance of News for Penny Stock Trading
Trading penny stocks can be a risky endeavor, but having access to quality news and information can help mitigate some of that risk. As an investor or trader, it’s critical to understand how news events can impact penny stocks and how to use news to your advantage when developing your trading strategy.
What is Penny Stock News?
Penny stock news is, as the name suggests, news about companies with share prices below $5. It refers to new developments, events, and announcements that affect penny stocks specifically. This includes financial results, corporate deals, regulatory changes, and other major events that can cause penny stocks to make big moves in either direction.
Some examples of impactful penny stock news include earnings reports showing strong revenue and profit growth, partnerships or agreements with larger companies, new product launches or expansion plans, clinical trial results for biotech/pharma penny stocks, FDA approvals or rejections of drugs and devices, acquisitions or mergers, lawsuits, investigations or scandals.
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For penny stocks with small market caps, even minor news can trigger huge volatility in the share price. This is what creates opportunity but also risk for penny stock traders.
Knowing Where to Find Penny Stock News
If news is so important for trading penny stocks, where can you find up-to-date, relevant information? Penny stock-focused websites and newsletters provide news tailored specifically to cheap stocks and OTC markets. Examples include OTC Markets, PennyStocks.com, and major newswires like PR Newswire, GlobeNewswire, and Business Wire.
SEC filings like 8-K, 10-Q, and 10-K forms contain valuable information on company events. Always verify any claims. Following relevant penny stocks to watch, executives, and news sources on sites like Twitter allows quick access to news. Screening tools can alert you to penny stocks experiencing news-driven volume spikes or price swings.
The key is casting a wide net across multiple sources to catch all potential news events. It takes time and effort, but can pay off handsomely.
How News Impacts Trading Strategy and Risk Management
Now that you know where to find penny stock news, how do you actually incorporate it into your trading plan? Have a strategy before and after news hits – think: if this, then that. Have buy/sell plans ready for predictable events like earnings, clinical trials, etc. Consider both long and short setups – News can present opportunities to buy breakouts or short breakdowns. Prepare for both scenarios.
Manage positions actively around news – Set stop losses or take profits quickly around events. Don’t get greedy chasing runners or bag-holding crashes. Control position sizing – Right-size bets based on news certainty and how much the stock could realistically move. Bigger news warrants smaller sizes. Verify and contextualize – Cross-check news, screen out PR hype, and put events in proper context for the company. Watch for follow-on events – Initial news often leads to additional events like lawsuits, management changes, or earnings guidance adjustments.
While challenging, developing the skill of trading around news can unlock huge profit potential in penny stocks. Just remember to manage risk, given the added volatility.
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Keeping your finger on the pulse of impactful penny stock news and implementing an intelligent trading strategy around major events could lead to outsized returns. However, it takes time, research, and disciplined risk management. Use news to your advantage, but don’t let the hype push you into bad trades. With the right approach, news trading can be a profitable endeavor for penny stock investors. In this article, we look at 4 penny stocks with news, and you can decide whether they deserve a place on your watch list in the stock market today.
Penny Stocks To Watch
- Bioxcel Therapeutics (NASDAQ: BTAI)
- SiriusXM (NASDAQ: SIRI)
- Seastar Medical (NASDAQ: ICU)
- Momentus Inc. (NASDAQ: MNTS)
Bioxcel Therapeutics (BTAI)
Last week, BioXcel Therapeutics disclosed favorable findings from a third-party audit. This was concerning data integrity at a TRANQUILITY II Phase 3 Trial site. There was no further misconduct or fraud found beyond a previously reported instance.
The audit also supports the reliability of the trial data and a potential supplemental New Drug Application (sNDA) submission for BXCL501 for treating agitation in probable Alzheimer’s disease.
“We believe these results of an audit by a respected, independent firm validate the integrity of data from the single site in question and add to the body of clinical evidence we intend to include in our sNDA submission,” said Vimal Mehta, Ph.D., CEO of BioXcel Therapeutics.
The positive audit results, alongside the statistically significant trial data, may bolster investor confidence. That may be one of the reasons that BTAI stock has climbed. This week has continued placing a spotlight on the company after Bioxcel reported that the Centers for Medicare & Medicaid Services issued a permanent and product-specific J-Code for its IGALMI for treating agitation related to schizophrenia and certain bipolar disorders.
SiriusXM (SIRI)
The audio entertainment company has been a long-standing name in satellite radio. Shares have made a rebound over the last few sessions, thanks to recent M&A news.
This month, the company announced the extension of its deal with FOX News as well as increasing its quarterly dividend by 10%. However, what has come into a more certain focus is the company receiving an offer from Liberty Media Corporation to combine Liberty’s Liberty SiriusXM tracking stock group with SiriusXM.
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Analysts appear optimistic about the proposal. Deutsche Bank Securities said in a note that this will help the company achieve its goal of eliminating the net asset value discount.
Seastar Medical (ICU)
SeaStar Medical is a company entrenched in medical technology. They are pioneering extracorporeal therapies aimed at mitigating inflammation in crucial organs. This week the FDA granted an Approvable Letter to SeaStar for their Pediatric Selective Cytopheretic Device. This is designed for children grappling with acute kidney injury and sepsis.
“Receipt of this Approvable Letter is a major accomplishment indicating that the FDA supports our application and acknowledges the potential of our device to save lives and eliminate dialysis dependency in critically ill children with AKI and sepsis,” said Kevin Chung, MD, Chief Medical Officer of SeaStar Medical. “We intend to work closely with the FDA to complete the final steps outlined in the Letter and anticipate the much-needed availability of the product in pediatric intensive care units by early next year.”
SeaStar could hold promise if it navigates commercialization adeptly. Although there are plenty of risks and potential pitfalls that could be faced throughout the process. Shares of ICU stock have exploded in the stock market today, jumping more than 12% from Friday’s closing price.
Momentus Inc. (MNTS)
Shares of Momentus continued trading higher this week. MNTS stock has now rallied from $1.03 on October 6 to highs this week of $$3.69. One of the catalysts that seems to have helped the space stock is news.
This month Momentus announced that it signed a deal for orbital delivery services with C35, a repeat customer of the company. C3S CEO Gyula Horváth said, “This solution allows further optimization of the satellite’s profit-generating phase during its lifespan, complemented well by our platform’s high availability. In this regard, the solution of Momentus can provide great assistance, which we had the opportunity to try in the spring.”
The company also inked a deal late last week with RIDE! Space for transportation and orbital delivery services starting in Q1 of 2024.RIDE! Space will fly its Gaindesat and Djibouti payloads on a single mission.
Heading into the week, MNTS stock is on the radar after headlines focuses on its upcoming third quarter financial update and conference call. Keep November 14th in mind as this is when the event is set to take place.
