Penny Stock Market Cycles Explained – penny stock trading for beginners 2019

Penny Stock Market Cycles Explained – penny stock trading for beginners 2019


Have you noticed that in certain weeks the
penny stock squeezers run a lot longer? And maybe the next week or the week after
all the penny stocks sell off almost instantaneously after a pop, and the sellers gain control? Market sentiments in penny stock world are
very much driven by psychological emotions and move a lot faster than you may realize. Today I want to take the concept of trader
psychology further, by breaking down the three kinds of small cap penny stock market cycle,
and how the overall market condition affect the behaviors of buyers, sellers, market makers
and stock pumpers. So by the end of this video, you will be able
to see the trends in buyers and sellers in the penny stock world, and profit beyond just
reading patterns, but from trading the traders. As usual, these videos take me a good 10 hours
to make, to make sure its 99.9% value , and 0% hype. and 1% of bad jokes, i think i got
that math right. And all I ask from you, is a simple tap on
that like button. That’s all I want from you. Thank you very much. Okay, if you’ve traded penny stocks in the
last 4-5 years, you’ll notice that market cycles in the small cap world, rotate a lot
faster than the typical bull market or bear market of the large cap world. Those sentiment can last years. But in the small cap penny stock world, we
can see a week to 2 weeks of a lot of green, a lot of bullish movements, followed by the
next 1 or 2 weeks, where all the penny stocks are selling off and we see a sea of red. See, an ocean of red. Which marks the selling sentiment. And that’s because the players in penny stocks
are a lot smaller, these stocks are typically below $50 million market cap, some even as
small as $5 mil market cap, in the grand scheme of things, it doesn’t take much money flow
in or out in order to push the stock in either direction. And I’ve noticed that in between the buying
and selling sentiments, there’s usually a short period of stagnant sentiment, where
nothing was moving, and usually the moves are like 10 cents, and many of which are chat
room pumps. This is a simple google calendar I use to
track the major penny stock movers on the day. I like stocks that are generally lower float,
above $1, and can give me more than 50 cents range. So in June, overall, we had a pretty bullish
market sentiment in the penny stock world. These are tickers colored in green on this
calendar, obviously So you can see a lot of low float squeezers
like $SOLY, $ELTK, $MLNT, $PRVB. As you can see in these charts often marked
by a significant green candle and high volume of buying breaking out on the daily chart. Typically the break outs are very strong,
and the buying pushes the stock higher all day long. And a lot of times, in these markets, the
day one move would fuel a day 2, or even day 3 move to the upside. So how exactly should we trade and take advantage
of the buyer’s market sentiment, and no, its not just some bs answer like buy the break
of whole dollar breaks and sell 20-30 cents later. Buy my DVD and fund my lamborghini. Let’s take a look at CEI on July 9th. Which was the last major runner in the last
buyers market just 2 weeks ago. So in a market where the buyers have control,
typically the gap up penny stocks with a low float will break out higher and trend all
day. CEI on that day had a PR release and a reverse
split the previous day. The best way to approach this kind of play
is to buy the break of premarket high as per my gap up long strategy. If the stock is low float like CEI and had
a float of 2 million, generally it’ll squeeze up in dollars like we see here. In the buyers market, typically after the
initial push up at the market open, the stock will pull back and consolidate mid day around
lunch time. Now during mid day, doesnt matter whether
you are in buyers market or sellers market, mid day hours is where the market makers show
up to f* with you with fake breakouts and break downs on low volume. I talk about how you can spot market maker
manipulation in this video. But the next opportunity for longs to get
in at, would be the downtrend break after a consolidation. You can avoid all these mid day bs, and get
in after the stock confirms that its ready for round 2 push to the upside with strong
volume. Again, don’t buy breakouts, either you join
the front side with premarket downtrend break or the mid day consolidation break. A third way to profit in a buyers market as
a long trader, is to swing stocks closing strong on day one overnight for a premarket
gap up or morning spike on day 2. Now we can see CEI failed as an overnight
play, but if you’ve seen my overnight buy strategy video, you know that this daily chart,
doesn’t not fit my criteria. But you can see, $KPTI and $FCEL were good
examples of swing overnight candidate. Again, I go through my thought process in
greater detail in this other video. Now, there is still opportunities for short
sellers in a buyers market of course. But you need to be very careful with your
timing, and wait for a trend to break before going in short. Don’t try to pick the top on day one low
floats, wait for the top to confirm. I’m gotten hurt many times before, and i
would never short front side again. In a buyers market, even when you short the
trend breaks, its scalp only. In this example of CEI trent break at 4.30,
you have to risk the reclaim of the trend around 4.70 for a potential to sell off to
the previous break out level around 3.50. So you’e risking 40 cents to make 80 cents. Thats not a risk reward i personally like. Some short sellers dont mind that risk reward,
but its always better as a scalp only. The safer way to short penny stocks in a buyers
market in my opinon, is to short day 2 or day 3 . Which is my favorite penny stock short
strategy. $CEI and $KPTI are perfect examples of that
set up. I think that’ll have to be a seperate video
all on its own, it’ll take me a long time to explain the specifics and the psychological
reasoning. I mean, you guys know I always put a lot of
time and research into each strategy video, theres no fluff in there, just a lot of bad
lambo jokes. So if you want to see a penny stock short
strategy video, drop me a like, leave me a comment to let me know. I promise illl make it for you guys. Next, you can see that in a matter of 2 week
transition period, from end of June to early July, we are now seeing a lot more red color
in the current week. This is a seller’s market in the small cap
world. What these red tickers mean that, there’s
a lot of strong movements pushing to the upside early on, generally a premarket gap up or
just a morning spike due to some news release, or pumps, and they sell off most of their
gains, over 50% of the gains to be specific. Some will hold green on the day but closing
very weak after some volatile sell off. That simply means, the sellers and the shorts
have control. You can see that with $CAPR, this stock gapped
up to $7 on July 15 premarket from $3 close the night before. Spiked up to almost $9 early on because of
its low float, and just sold off back down to $6 at the end of the day. And on day 2 and day 3 it just sold off any
gains. And its the similar story with $CODX on July
11 and again on July 18 just one week later. The stock gapped up and just got dumped early
on. In this kind of market, there generally isn’t
a day 2 move to the upside, instead, most of the moves on day 2 and 3, is the continual
selling to the downside. So the sellers still have control. So what’s the best approach as a long trader
in a seller’s market. Well, you have to wake up early, and be able
to trade premarket. As you can see on our example CODX, the push
to the upside happens early around 7 to 7:30am market time. If there’s enough volume premarket, look at
this, 200k shares, 400k shares per each 5 min candle. It will most likely push. I know robinhood doesn’t allow you to trade
premarket, but If u can only trade with mobile apps, check out Webull instead, its also free
commission trading but with extended hours functionality. And if you are long premarket, i would always
sell along the way up and out most by market open. Because in a sellers market, as you can see
At the market opens, $CODX pops a little bit with premarket shorts covering and late buyers
chasing, then it just dumps all day after the pop. And you may realize, this is the opposite
of what we see in a buyers market. Long traders have to scalp for smaller moves,
while short sellers can easily short the gap up on day one for an all day fade to the downside. And why is that? Again, think for the other traders, psychologically
in a buyers market where all the longs are seeing so many parabolic moves to the upside,
they are more likely to be interested in buying the next runner? Right? Everyone wants to jump into the next runner
for that lambo money. but if you are trading $CODX on this day Thursday
July 18, thats after seeing stocks like IMRN, $CAPR, $DMPI run up pre market and sell off
really quickly just 1 to 2 days prior in that same week. So people remember that. The volatile sell off creates fear, which
is the emotion that dominates the sellers market. In this kind of market sentiment longs are
more fearful to buy, and if they buy, they are quicker to get out. Because they remember what transpired yesterday
And in this market, sellers are more complacent and shorts can hold their positions generally
for an all day fade. The small cap market is very much driven by
psychology and emotions. And its by understanding trader psychology
and identify emotions of the current sentiment, that we can stay afloat in this game. Lets go to the third market sentiment, the
stagnant market. In between each major sentiment cycle, generally
between the buying and selling cycle, there is usually a few days to a week of stagnant
market. In this kind of market, there’s just not a
lot of things moving after the open, either all the gaps just sell off and fade all day
with no bounce. Or there just isn’t anything moving at all
and no significant PR’s in the penny stock world. The volume is generally really low, and the
stocks just move in channels of 5 10 cents. In my opinion, this is the most dangerous
cycle to trade in the small cap world, and its better to avoid trading this kind of low
range stocks all together. And thats because, this kind of low volume
environment is easiest for pumps to happy. Many pumps, not all, are started by
a lot of penny stock chat rooms, newsletters, and similar services. Think about it, members of the small cap services
pay to be there to play penny stocks, more specifically, on the long side. So Lets put our trader psychology analysis
hat on again. Most of these traders are new, and do not
have the account size to short with margin, or pay for premium brokers to locate shares. And especially with the rise of free trading
apps like robinhood and webull, most new traders are long biased. And they join these cheap penny chat room
services, for alerts to buy stocks. And when these chat rooms don’t have any
major movers like CEI, SOLY, to buy long in a stagnant market condition. How are the moderators going to please their
thousands of members, who are paying them like $50 to $100 a month for their alerts? Well, they buy up low float stocks first,
and alert their members to buy and sell, with them. And they specifically pick low float stocks
because it doesn’t take much buying to move those stocks. Recent chat room pumps like CUR, and LMFA
were perfect examples. There’s only a couple thousand to ten twenty
thousand shares traded. This is not real buying with volume, these
are chat rooms swapping shares with each other, and the moderators accumulating shares. And keep in mind CUR only has 800k shares
float. And out of nowhere, there’s a 20 thousand
share volume in late afternoon. This was when they were alerting their members
to buy on low volume. And the drop that followed is when they tell
everyone to sell obviously. But guess who sold first and who sold last? Like ive said before, cheap chat rooms are
cheap for a reason. Thats why many experienced traders join these
kind chat rooms and short into their alerts. Again, Day trading penny stocks is 90% emotional. This is why I believe day trading psychology
is so important. You have to think for the other players involved,
and understand the market sentiment that will drive the others to make the buying or the
selling decisions. This is the kind of psychological analysis
that will separate you from the sheep that follow alerts and study just patterns. Don’t trade chart patterns. Understand the traders in the stock. And trade those traders. Again, if you want that penny stock day 2
short strategy, comment down and let me know. I’ll deliver, all its costing you, is a
like. Not costing you $1k DVD’s or $500 alerts,
that many people use to buy their lambos. All i ask is a like. And i ‘d really appreciate it. Thank u guys for watching

100 thoughts to “Penny Stock Market Cycles Explained – penny stock trading for beginners 2019”

  1. How are you coping with low summer trading in the penny stock world? Let me know!
    For me, I switch most of my focus to mid cap and large cap earnings trading.

  2. I am really looking forward to your shoring videos. I have been using your overnight strategy in July. It works pretty well in July. I pretty much only used this strategy in the July. I am curious about why the stocks will gap up in the premarket and get sell off after the market open. It is because in the summer and the market kinda slow down? idk, I am too scared to do intraday trading.

  3. Thank you so much for answering my questions on other video's . Great content, and yes its trading the traders. Keep up the excellent videos !!

  4. would love to hear more about day 2 strategy. Also more details on your overnight strategy. I watched the video but have questions.

  5. Your videos are so informative that I always have to watch them 3-4 times, and each time I hear something that I didn’t hear the last few times!
    Also I’d love a video on how to backtest your own strategies. Do you just use spreadsheets? ThinkScript strategies? There’s lots of options but no one really seems to explain backtesting well.

  6. Thank you for another great video. Will add to my Word Doc of Humble Traders videos broken down. Thanks. Learning more every week.

  7. I just found your channel when i was doing research for my new channel. Great insight on Trader Psychology! Keep it up! Just subbed!

  8. your videos are dope. I learn new things all the time from your videos, and the jokes keep me entertain which trigger me to memorize the lessons.

  9. Great video explaining the topic, thank you! oh btw, where are your bad jokes? Did I miss something? You are funny👍HAHAHA,

  10. damn this some quality content learned a lot, the 1st trade I made this year was a loss on $VISL in july when you're stats showed the shift in buyer > seller MKT … lol

  11. im so glad i found you!!! love the videos !! looking forward to the short video and can you make a video about trading with options pleaseeeeeeee!

  12. I came across your videos and subscribed. Fantastic info. I hope I can transition into a proper day trader. Still in the beginner band : (

  13. Great video, always keep us inform, videos with short squeezes would be nice, keep up with good work thanks for your hard work cheers 🙂

  14. Thanks for the video.. very informative. I always wait for next Wednesday for video! Since you talked about buyers/seller's market I have a question what is so special about Sept/Oct months for traders? Most traders wait for those months why?

  15. Most Humbled One! I am having a hard time walking away with a small gain or lost due to FOMO. Two weeks I was up $200.00 playing YOGA during a pop and halt. Instead of getting out FOMO/GREED kicked in and the stock fell off a cliff. I decided to double down and play an overnight swing. I woke up to a nightmare which resulted with a big lost. I did not blow up my account, but if I don't get FOMO/GREED under control I will soon. Should I switch back to hard stops instead of playing mental stops?

  16. Hello from Seattle. I agree with you about the cycles. APHA has a larger float but what a big Friday move on good earnings catalyst and downtrend break. Love Robson st…Love Harrison Hot Springs.

  17. thanks, pure gold as always, please make the short video. we all(speaking for myself, but you deserve it) will give to u part of our profits for your lamborghini fund.:P

  18. NEVER BUY PENNY STOCKS, IN 40 YEARS EXPERIENCE, I FOUND 90 PERCENT OF THEM ARE JUNK. YOU WILL LOSE YOUR MONEY 90 PERCENT OF THE TIME. YOU HAVE BETTER CHANGE IN WINNING IN VEGAS. THEY ARE BETTER STOCKS TO BUY. QUALITY EVEN IN SMALL NUMBERS IS BETTER OF THOUSANDS OS SHARES OF PENNY STOCKS JUNK… THANK YOU.

  19. Hey,do you think that this stagnation in small cap is due to the fed cut + being summer?there is been about 3 weeks of total stagnation.

  20. Can you make a video, recapping and going over your trades, why you chose to trade the stock and when and why did you enter? Right now there is no penny stock movement so I’m trying to get used to mid to large cap stocks and i need a bit of guidance

  21. Love your content. I see videos from different Stock “gurus” and yours are definitely refreshing. I see what you did there with the Lamborghini reference 🤣😂. Please make more videos about your routine start to end step by step for swing trading, especially after coming back from vacation. I have to focus on swing trading since I have a full-time job and I want to be profitable enough to quit my job and day trade. Thank you!!

  22. Awesome videos, ive been enjoying and smashing the thumbs up on all of them! Do you have any book/resource recommendations which talk more about the psychological explanations / the why of the market? – how did you learn about it? Thanks!

  23. This is 101% value! Could you pls provide some information about the timing of these 3 markets, in this video you mentioned June is kind of buyers market, in another of your video you mentioned July is kind seller market and Aug- Sep is kind buyer market, HOW did you figure out? Is there any method to follow to figure out the timing, just by tracking the daily runner on the calendar? Or each year is the same? Appreciated!

  24. Thank you for the video. You are the only trader I have watched so far that could explain things in an understandable way. Could you make another video talking more about how you define whether the ticket is green or red to you by the end of the day. I look forward to it. Thanks again.

  25. Wow, you are the best. Just learning and I found your channel couple days ago. I see your a "smarty pants" and I must think for the other traders.

  26. Question here!
    Are there any indicators that tell you that the market cycle is changing BEFORE it actually changes?

    I know right now (in small cap world) we are in a seller's market, BUT I know October is historically a BUYER'S market.

    What data should I look for to tell me that the market is changing?

    By the way, thank you for all you for videos, you are helping me become a better trader.

  27. In your opinion does the market cycle follow the trend as in the photo? buyer, then seller then stagnant and repeat. (Pattern) Or does it jump randomly between? IE: buyer, seller, stagnant, seller, buyer, stagnent, seller, buyer, seller, stagnant (random no pattern)

  28. Hi Sweetie,just found you and so happy with your videos.can you tell me how to find good stocks daily to buy?also for swing trading what is the chart i should watch?day or week or hourly?
    Thank you

  29. How is this stocks getting to your Google Calendar? Could you make a detail video on the criterias?
    How come the Day 1 Runner doesn't go into the next day on the calendar as a gap down or gap up?
    You only track for the day being?

    I love the idea on the calendar for visual purposes.

    Thank you in advance

  30. Thanks a lot for the very useful and informative video. What would you do with CEI stocks now ($0.15), if you still own more than 10K that bought at $2.20 per share. sell and absorb the loss or wait for it to come back (if that ever happens). thanks.

  31. I’ve just smashed the like button with my 10 pounds hammer. Thank you for your teaching 🤑🤑🤑💵💵💵💵💵👍

  32. Love you're videos since I've been on this road to learning a new career… you're jokes are funny and love how tou describe and explain everything … I'm in the bay area so I listen to you through traffic everyday . Thanks again

  33. This is awesome analysis. Learning a lot. Could you please consider doing a video on level 2 data usage, and really help explain it in terms of marketmakers, buyers, etc

  34. I'm a student and member of Warrior Trading… I really like your videos. I'm a fan of you at this point. You have great knowledge of trading. If you do open your trading group or an online trading room, I would really like to become a member.

  35. I love your jokes!!!
    I’m so happy I found your channel. No one else goes into the level of detail that you do. I will be watching all of your videos so I can learn from the best!
    Thank you 🙂

  36. No thank you miss Humbled Trader for you're advise; ps that dynamic personality of you'res makes it easy listing:

  37. Got an idea for you towards Lambo $, You should sell your calendars of stock tracking highs & lows monthly. Already produced and there ya go, other people would benefit for a small price. I know I'm just learning and taking in a lot of info for a beginner…. and not that I'm lazy but you already do these monthly. Something for you to think about. They'd be easy to download for a small fee.

  38. Thank you, for taking the time to present all of this relevant information.
    Your style and knowledge are very impressive!

  39. you seem very knowledgeable and I really enjoy your videos and information that you share , thank you! How has the trading been going for you personally ? Are you able to live off of just your trade wins ?

  40. You are amazing. I am actually starting to understand these concepts. Thank you! I only wish I had more hours in a day to study your videos.

  41. Really appreciate your information on the impact of market makers on the stock price. I have watched many videos on penny stocks and this is the first one who addresses it. You teaching methodology is impressive. Keep it up !

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