Canadian Penny Stocks Blog » Technical Analysis

Is Now A Good Time For Penny Stocks?

Canadian Penny Stocks — Wed, 23 Mar 2011 02:11:31 +0000

It’s a simple question. Is now a good time for penny stocks? There’s a lot of crazy things happening in the world and there’s enough volatility in the stock market in general so are penny stocks worth the extra risk?

This isn’t a normal time and rest assured that while some people lost a lot of cash during the Japan fallout, other investors made out like bandits. I don’t want to get in to any moral objections to this behaviour. We can save that for another time.

The stock market itself has been considered a good investment in the long term. The short term volatility should really been seen as opportunities to take action on inefficient pricing of stocks during times where valuations are too difficult to calculate given the news of the day. Penny stocks however are always going to be a high risk investment.

Does that mean we take a miss at penny stocks?
Then there wouldn’t be much need for this blog. The reality is that penny stocks provide an opportunity that is too good to miss if you have the risk tolerance to be invested in them. The proof is pretty simple. We take the top 5 performing stocks on the TSX (over $5.00) and the top 5 performing stocks on the Venture exchange and compare their % return over the past year.

TSX stocks over $5:
CNL.T 561%
FR.T 488%
SWI.T 426%
SBB.T 353%
HZU.T 291%

Compared with the penny stocks from the venture exchange
PHM.V 14,900%
BAT.V 2,850%
ORT-A.V 2,275%
RGD.V 1,680%
NEE.V 1,660%

You can’t win them all, bit one win can go a long way with a successful penny stock.

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TSX Technically Worrisome

Canadian Penny Stocks — Sat, 12 Mar 2011 14:24:10 +0000

The past 5 days have been pretty rough on stock markets. Fundamentally, the chaos in Libya is causing a lot of uncertainty in the investing community so money is getting taking off the table. At the same time the Toronto Stock Exchange was reaching a resistance level as you’ll see in the chart below. For the most part, resistance and support levels are held, so from a technical perspective we were due for a correction. When the technical analysis pointing downward matched up with the fundamental bad news, the correction happened in a big way.

I’ve highlighted the channel so you can see how the resistance level was being tested and failing all along the way, but the support level wasn’t getting the tests as often which would be considered an overall bullish trend.
So what happened to the bullish trend?
Right around the same time the technical traders were expecting a correction, the fundamental traders received news of chaos and instability in the world and wanted out. So it was a double dose of bearish sentiment happening to drive the stock market down 600 points this past week.

The bad news beyond the fact that we’re down 600 points is that the chart has fallen through the support of the up channel trend. It looks like there’s a little support at the 13,400 level and then more support at 13,200, but either way you slice it, there appears to be more room for declines in the TSX in the short term.

The fundamentals seem to be supporting more downward movement as well, considering the devastating effects of the earthquake and tsunami. Our thoughts are prayers go out to those people affected by those events.

Technorati Tags: stock market, Technical Analysis, tsx

Are Gold Prices Tied To Egypt?

Canadian Penny Stocks — Wed, 02 Feb 2011 01:32:36 +0000

Despite what is happening in Egypt and the Arab world, gold hasn’t moved any higher. This would cause a great deal of concern for the gold bugs and people bullish on gold.

Adam Hewison has a great explanation of why gold is where it is and where it is going. It’s firmly grounded in technical analysis which is a good thing for a commodity like gold. Here is the video on gold:

Want to trade like Adam? Click here for FREE lessons.

Canadian Stock Market Analysis

Canadian Penny Stocks — Sun, 19 Sep 2010 15:43:28 +0000

The stock market of the past week has shown some strength and is close to breaking through a 6 month high. Does this mean it’s time to invest or time to unload. The answer, as often in investing, is it depends. In the short term it looks like there will be enough resistance and shift in momentum to see a pull back in stock prices this coming week.

However in the longer term the moving averages (50 & 200 day) have crossover and are indicating a bullish trend. Once we’ve made it through the correction for short term resistance we can expect that the 6 month highs to be broken and continue higher. This of course also hinges on stable news of the economy. Any significant shift in economic data could spike the index higher or lower. This is where the variability and risk come in to play while investing using technical analysis.

Here’s a video giving a visual of what we’re talking about. Enjoy.

Technorati Tags: canadian penny stocks, Technical Analysis, toronto stock exchange

TSX Market Technical Outlook

Canadian Penny Stocks — Mon, 06 Sep 2010 23:38:59 +0000

This past week on the Toronto Stock Exchange was a positive one. But is it staying that way? Let’s take a look at some basic technical analysis to see if it is.

The week closed a 3 month high and broke through the resistance level. All signs are pointing to a continuing trend upward until a new resistant point is set and momentum slows. The MACD is showing high levels in the overbought side of things but I’ve never found that to be too reliable of an indicator. Moving Average crossover are usually a good sign of a shift in momentum but they are currently still in a large gap in the upward direction.

There are support levels at 11,730 and 11,460 which means that there is a distance to fall if the trend reverses and markets fall. Right now if the TSX is to remain strong it will need to maintain that psychological level of 12,000. Round numbers are always nice and many people are either entering or exiting at this level.

The thing about looking at technical analysis into the future is that it is difficult to predict the fundamental pieces of news that change the market sentiment. If you decide to take the technical analysis approach to investing in stocks then you should pay close attention to the fundamentals as well otherwise you may have some serious shocks in your investing strategy.

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Technical Stock Market Outlook

Canadian Penny Stocks — Fri, 25 Jun 2010 20:03:36 +0000

The market volatility is certainly continuing throughout this week. With triple digit moves in both directions it’s difficult to determine where the overall stock market is headed. Unfortunately from a technical analysis perspective it doesn’t look good. Check out this 3 month chart of the TSX.

The short term trading range is between 11400 and 12200 and we’re currently trading around the 11,700. The most recent leg of the trading is downward. The moving averages are the really interesting part of this chart. Falling below the 200-day moving average is not a good thing and is almost always leading to a bear market.

The chart shows that we’re right on the verge of crossing below that line. When/if that happens man technical analysts will start shorting the market or clearing out of positions. That will push the markets even further down. Not good.

The only thing that could help us is if that 50 day moving average stays above the 200 day and we get some consistency in the market or strength. If we do see the crossover occur, then watch out below! Taking a look at the 3 year TSX chart you can really see what happens when there’s a crossover of the 50 and 200 day moving averages.

Naturally, the drop off will not likely be that dramatic but it is a concerning crossover nevertheless. So the next week of investing will really be a make or break in the support levels of the overall stock market. What is your take on this market?

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The Europe Story Isn’t Over Yet

Canadian Penny Stocks — Fri, 21 May 2010 02:15:18 +0000

I must admit that I get a kick out of watching Jim Cramer. The flashy entertainment often makes for an amusing time while eating supper. I came across this video today from Jim Cramer talking about Europe and his statement was actually really something that is worth listening to. Some part of Europe will collapse in the next 48 hours or it won’t at all.

Naturally his opinion is peppered with entertainment and a dash of sensationalism but ultimately it could be a valid point on how the stock markets will begin to adapt to the on-going financial crisis in Europe.

Take a watch of this video and share your opinion.

Is there a specific way that you’re playing this recently pull back? Here at the Canadian Penny Stocks blog, we did a video a little while back and right now it’s bang on sitting around 11,400. There is 1 year support levels around this level so from a technical perspective it would be helpful to have this support level being held, otherwise we’re looking at 11,100 for light support or 10,650 for stronger support. MACD is still not converging or crossing over yet. Strong news will be needed to push this market higher, but it isn’t looking hopeful yet.

Technorati Tags: canadian penny stocks, canadian stock market, europe finance, Technical Analysis

Canadian Stock Market Outlook

Canadian Penny Stocks — Sun, 09 May 2010 13:06:12 +0000

Reviewing the Toronto Stock Exchange 6-month chart from a technical analysis perspective.Â The analysis shows that the recent channel upward has been significantly broken by last week’s dramatic fall in prices.

Market prices have broken through two lower support levels and are now heading towards a 3rd support level.Â Barring anything significant news on Greece, we should see the support come in around this level.

Clearly, the video format is new here at the Canadian Penny Stocks blog and I would like to hear how you like the format.Â Happy trading.

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Canadian Stock Market Outlook for May

Canadian Penny Stocks — Mon, 03 May 2010 01:27:11 +0000

A lot of sentiment is saying that May is going to be a down month for the stock market and while it may be true, we should take a look at the technicals to see if the match up with the fundamental weakness that is permeating the emotions of investors.

Both in the short term (3-month) and the longer term (12-month) there are channels upward but it looks like it’s hitting the resistance consistently which will likely mean pulling back to test the resistance levels.Â The MACD seems to be stranded in the middle which suggests there isn’t going to be a breakout happening anytime soon because of the lack of momentum.Â This should mean that we’ll be staying in the short term channel.

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TSX Downtrend In Focus

Canadian Penny Stocks — Sun, 31 Jan 2010 20:50:58 +0000

More downward motion in the stock markets over the past week. There was a lot of good news released during the week but the few misses were enough to scare off investors. I haven’t done any technical analysis on the site here in a while so I thought that with this clear trend downward we should take a look at the TSX chart to see if we can figure anything out.

It will be an interesting coming week because as you can see from the blue lines indicated an upward channel that has tested the top and the bottom but has stayed within this range since mid-September. Now we are testing the lower end of that range so this could mean a confirmation of the trend and a rise sooner. If that’s the case it looks like we could be going towards the orange line at 10,865.

The other thing to look at is the MACD that is strongly in the oversold side of things and has been for at least 2 weeks. This would usually indicate that buyers should be coming back into the market. If we see the support line being confirmed and the MACD moving towards neutral to positive, then we should see a bounce back, otherwise it could be “watch out below!”

Technorati Tags: canadian stock market, market outlook, tsx