Which way? Penny Stocks education

[themickey]

I don't agree with the use of a share price dollar value to describe a penny stock.
My preference is to use capitilization value rather than share price.

Where I trade, there are nano cap, micro cap, small cap, mid cap and large cap stocks.
Beginning at the bottom of the scale the smallest caps listed are approx $10mil thereabouts.
(don't know exactly).
But if a stock lists its IPO at $10mil and then the share price perhaps drops, the cap can go down to maybe $1mill or less before it needs to capital raise or go bust.

My rule of thumb for trading, any stock below $50mil is nigh on useless, they just hardly have enough money to operate. It goes like this, if the stock is less than $50mil and they hit it big with an invention or strike some gold mine, they still can't grow because $50mil cap is struggle street money. They need to capital raise, adding more shares adds to stock dilution (inflation).

My bottom line for seriously considering a penny stock is a minimum market cap of $100mil.
More on this later.

But the more money a company has, the quicker it can grow, less money and they are pushing uphill.

 

[themickey]

Here's a screen shot taken from Tradingview Screener, on the RH column is market caps of some US penny stocks, the last two rows we have caps of $8mil where one has a stock price of 36c and the other has a stock price of $4.49. Near same cap but widely different share prices, obviously the 36c stock will have a hugely different number of shares which probably reflects more capital raisings.

 

[themickey]

I don't agree with the use of a share price dollar value to describe a penny stock.
My preference is to use capitilization value rather than share price.

What does market cap and number of shares and share price have to do with the price of fish regarding penny stocks?
These become important considerations later which I'll come to for finding penny stocks contenders.
It's all part of laying a foundation which will be explained later.

 

[Overnight]

Seriously Mic? Amazon was never a penny stock. IPO price was 18. It split 3 times before 2000 then ran up to 90 bucks before the tech wreck when it plummeted to just under 6. Since then it hasn't split. Just under 6 dollars is as cheap as you could have ever bought it.

I don't understand the historical data.

What you are quoting is what is says on the AMZN investor page.

So how does the historical data work?

Those are the OHLC weekly numbers, before the splits.

 

[deaddog]

Those are the OHLC weekly numbers, before the splits.

Those numbers are after splits.
AMNZ iPO'd at 18.

 

[deaddog]

Those numbers are after splits.
AMNZ iPO'd at 18.

To follow up if you had bought 1 share at 18, after the first split you'd have 2 shares, a 3 for 1 split would give you 6 shares and the final 2 for 1 gives you 12 shares.
$18/12 shares= $1.50 per share cost basis.

 

[Overnight]

Those numbers are after splits.
AMNZ iPO'd at 18.

That's what I don't understand about how they present the data. Why don't they simply show the actual price per share at the IPO price before the splits? Why does it not show 18 bux per share at the get go?

Here's the prices after the first split. All seems normal.

The farthest column on the right is "price adjusted after split". This is Yahoo data. I guess they just suck in the way they present it, because nowhere in there does it appear that the price ever IPO'd at 18 bux.

 

[themickey]

I was just going off the chart, showing in Q3 1997 high of $4.81 low of $1.51, I wasn't aware of the splits.

 

[Overnight]

I was just going off the chart, showing in Q3 1997 high of $4.81 low of $1.51, I wasn't aware of the splits.


View attachment 277507

And nobody was aware of what the fuck this company was going to become. Maddening, isn't it!

 

[themickey]

The bain of penny stocks are a couple of things, pump ‘n’ dumpers and manipulation.

Starting off with manipulators, why do manipulators hit a penny stock?
To create a dummy move to get a better price which is not that difficult.
Also to create dummy moves to exit at a better price.
So therefore it is either to enter or exit manipulators will hit a stock with size.
Yep you heard right, smack it down because they want to buy but this sort behaviour is not in the realm of Joe Retail, this will be a big fish doing it.
I'm calling manipulators lone wolf players who are not using media to pump a stock.

As an example someone with clout can drive the price down or up, knocking out stops or drawing in players, throwing a lot of doubt or fear or exhilaration into a stock price only to reverse upon it suddenly.

Manipultors often will strike very soon after open, or very late in the day.
To drive a price down, smack it on open then another smack end of day.
This creates the perception a mass of traders are exiting.
Because day traders in particular follow a crowd, one smack with size often creates others to follow exasperating the move.

The smack beginning of day starts the ball rolling, end of day smack is a confirmation smack to get stock to close low near end of day where technical traders read this as a sell signal.
A midday smack is often there to prod it along if reqd due to low liquidity turnover which helps them.

In my experience this goes on constantly so it requires conviction to be able to trade pennies.

Conviction is not false hope in a stock, it's having experience to know you are onto a high potential stock and not getting shaken out. Also the experience to know that manipulation is part of the field you play in so expect it.

Manipulation can be identified as one off hits with size.
By that I mean they smack it, then wait, and hit it again later. This may go on several days or more.

Who mainly trade pennies? Retail.
Retail mainly trade small size compared to instos.
We'll come back to this later.
I'll touch on pump & dumpers next.

Manipulation is usually on stocks which are worth something, especially when attempting to drive price down. Pump and Dump is usually done on shit stocks.