There’s an interesting phenomenon that happens to penny stocks at a certain key level…
They can have 10%, 20%, or even 30%+ moves after crossing this crucial line in the sand.
It happened yesterday in MicroAlgo Inc. (NASDAQ: MLGO) — the stock actually had a 40% move from this level…
So today I’m sharing what important level you can look for in true penny stocks.
And since they’re so hot right now, there’s no better time to learn this to help you get an entry in these stocks.
The “Century Mark” For Penny Stocks
The key level that creates big moves in penny stocks goes back to the OG trader, Jesse Livermore… (Read about his trading career here.)
His “century mark” rule was a theory he had that once stocks broke above the $100, $200, or $300 mark, they would go substantially higher.
Penny stocks don’t trade for that much money … But I see the same effect in these stocks when they cross $1.00.
When true penny stocks cross $1 it can create predictable 15% to 30% spikes.
It especially works with biotechs, stocks with news, a low float, and that are former runners.
You can nail and bail these setups with the right expectations.
Here’s an example from last month.
ZyVersa Therapeutics, Inc. (NASDAQ: ZVSA) had all the criteria I listed above.
And on January 17 in premarket, it spiked 33% after breaking above $1…
ZVSA chart: 1-day, 1-minute candle — courtesy of StocksToTrade.com
MLGO broke above $1 after the open yesterday morning.
It’s not a biotech stock but it does have a low float, it traded high volume, and it’s a former runner.
And after it broke $1 it had a staggering 67% move!
MLGO chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
There’s no secret to trading this phenomenon…
You can trade it like a breakout. Enter the stock when it breaks $1, have a stop, and aim to catch a 15%-20% spike.
Don’t let greed take hold. Nail and bail your trades and move on.
You won’t see this setup every day. But since true penny stocks are hot right now, it’s another tool in your arsenal that you can use to take advantage of all the opportunities out there.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade