I love penny stocks.
If a stock is screaming higher on good liquidity you can bet your bottom dollar I’m looking to day or swing trade it.
Which is why Thursday afternoon I emailed about GNS, in the $1.70’s, via my Lighting List newsletter.
But I also know it’s not wise to ‘drink the kool-aid’ and fall in love with most penny stocks.
Company executives have been blaming ‘naked shorts’ for their penny stocks' poor performance for as long as I’ve been trading. And they will continue to do so.
Friday morning, while teaching live, I told subscribers to look for other companies making similar announcements, but not to expect similar big moves.
Sure enough, at 9:15am HBLZ announced a naked short selling task force lol.
Then a bitcoin stock, BTB, joined the party, followed by an EV stock MULN.
HLBZ literally put the top in for GNS as traders started to catch onto this nefarious catalyst.
Sloppy seconds anyone?
Is there such a thing as sloppy thirds? Afterall, it is a bitcoin stock.
MULN found a way into the party.
So here’s the lesson. I love penny stocks. And some are actually good companies. But if I could teach you anything it’s that most are ONLY good for day and swing trading. Think of penny stocks like speed dating. It's super exciting going on a lot of quick dates, but the more you learn about each date, the more you realize it’s not a good fit.
Do I think short selling is bad? Nope, it’s a much needed part of the market. Do I think naked short selling is bad? 110%! It’s actually illegal.
But let’s not confuse that with what’s happening here. Even if these stocks had a lot of naked shorts in them, flushing them out would be a temporary bump at best.
Which is why I teach subscribers the art of day and swing trade most penny stocks i.e. speed dating, not marriage.
In my opinion GNS will dump all the way back down to $1’s. That doesn’t make me a hater. Afterall, I put it on my watchlist. It just makes me wise because I’ve seen companies pull this nonsense before. I’ll trade that momentum, but I won’t marry the stock. And I know how to spot the top on GNS i.e. the minute HLBZ announced a task force too, the balloon popped.
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But make no mistake, I teach traders how NOT to become bag holders. Everyone who bought GNS above $4 is probably gonna be holding a HEAVY bag next week.
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