We didn't see fireworks within the penny stock market on Monday... at least not in the same way we've been seeing for the last few weeks. A handful of tickers caught traders' interest though. Let's take a look at each of these favored stocks, as they may well be great trading candidates for today and beyond.
The hot penny stock list,
by the way, is Vical Inc. (VICL), TerreStar Corporation (TSTR), Spherix Inc. (SPEX), and Ingen Technologies, Inc. (IGNT).
Vical Inc. (VICL) Don't get too enamored by yesterday's 22% pop from VICL yesterday. The move left behind a fairly big gap, yet simultaneously didn't actually carry Vical shares to any particularly impressive level. The high of $2.87 was still well short of April's and June's peaks.
The reason for the jump was "successful swine flu vaccine tests". Shocking.
Congrats to Vical Inc. et al, but here's a reality check.... y
ou and 500 of your competitors are in the hunt for a similar treatment, and a bunch of them are a lot further ahead than you.
To their credit, the vaccine seems to be 100% effective - something that
hasn't been said by anyone else yet. Unfortunately, there is still going to be a lengthy process between where the vaccine is now (preclinical) to an endpoint - and approval - during clinical testing. A lot can happen in that time. And, the rumor is that the government will need to supply the money to test the vaccine,
That said
(and this isn't from a trader's perspective, but rather an investor's perspective), I continue to find Vical's cancer vaccine an interesting development. So does Merck, judging from their recent milestone payment of $1.5 million for Vical's ongoing development of the cancer treatment.
Resistance is at $3.13, while support is at $2.25 and rising. I'd trade the wedge/triangle shape that's forming (breakouts and/or ranging).
TerreStar Corporation (TSTR) Here's one of those examples where the market knows something is going to happen, and even though investors can't assign a specific dollar value to the inevitable action, the fruition of the task is still the key to the stock's success.
The company intends to offer satellite/terrestrial broadband for mobile devices using a satellite. If all goes as planned, the company's satellite (TerreStar-1) will launch today. The stock is up pretty nicely on the news, having fallen for over a week now. It's also very overbought.
This is the natural progression for mobile telecom, though I don't know how marketable it will be just yet.
(The customers are apt to be business and government customers though, so cost really isn't a huge problem.) At the same time, devices that can handle both satellite and terrestrial broadband connections are limited in number. Oh, by the way, SkyTerra Communications Inc. (SKYT) is planning on launching a similar satellite and offering a similar service sometime this year.
The satellite connection
better work well, and it better work fast, if TSTR shares are to offer a superior value. Looks like the market's now thinking they won't.
Support's at 90 cents for this penny stock, which I suspect will be tested before this thing moves higher again.
Longer-term, the technology will have to work for TSTR to keep the market's attention. There's 'alotta' room for recovery though. It's at least worth watching for now, though probably not yet worth owning.... seems overbought in the short run, and the 'value' is a little murky.
Spherix Inc. (SPEX)The diabetes treatment works so far, and that was good enough for traders on last Thursday. Too bad the euphoria wore off the next day.
Positive Phase II results for Spherix's diabetes drug Naturlose(r) (D-tagatose) pushed shares from $1.01 to $1.86 on the 24th of June. The close of $1.44 yesterday, however, suggests were seeing a little "buy the rumor, sell the news".
Well, actually it might be a bit of a stretch to call Naturlose's Phase II announcement 'news'... investors pretty much knew it was going well. I'm not sure why the sudden burst of excitement. Looks like the market has come to agree, since shares are down 40% from the peak price on the 24th.
The issue here is what's in -
or not in - the near-term pipeline. The company's got Naturlose involved in a separate diabetes treatment study that's currently in Phase III, and those numbers look pretty good too. There's just no word on when the product will be approved for sale.
I have a feeling this penny stock is going to at least revisit support at $1.00 before it starts to climb again. And frankly, if support at $1.00 breaks down, Spherix shares could be in real trouble. There's nothing really wrong with the company.... the stock just didn't deserve or justify the jump.
Ingen Technologies, Inc. (IGNT)This isn't my first mention of this pink sheet penny stock... or even my second mention. Nothing has really changed with my perspective of Ingen though -
the value is somewhat meaningless, as the stock is trading more on emotion and hope than it is on assessment and merit. It is what it is.
More important to us right now, however, is that IGNT shares seem to (still) be working on a move higher. Maybe we can catch a ride on the train.
My tipoff is yesterday's slight gain on rising volume, followed by today's. It's the second time we've seen this kind of action following the June 9th surge.
Translation? The buying is at least persistent.
As for why the strength is persistent, that hasn't changed either - Ingen's M.O. has been PR, PR, and a little more PR. And, it's working. The latest rounds came all three days this week.... Ingen hired an investment banker to handle the sale of the company (Monday), the sales response to the recently-launched nasal Cannula has been strong (Tuesday), and Ingen is seeking a sales price of 5 to 7 cents per share (Wednesday).
That's fine. Just bear in mind all the news about the company's sale came from the company rather than a buyer, isn't 'verifiable' in any meaningful way, and isn't a commitment of any kind.
(Other than that it's rock solid, right?)Do we care?
As an investor, I wouldn't touch it... the press releases are frequent (daily) and ambiguous, which is a mental red flag for me - the company's trying
waaaaayyyy too hard to appear successful.
As a trader, however (knowing most everyone else responds to the hype, at least for a while), I'll admit this one has the bull in me just a little curious.
I can't offer a meaningful target and stop price - just ride the trend, and don't be the last to get off the train.
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