Top Penny Stocks to Watch, June 2019 Update

I bet you’re just itching for hot penny stocks to watch . Go on … admit it.

Deep sigh…

I’m trying this new feature on the blog — a monthly list of stocks to watch. But do yourself a favor: stop looking for hot picks. It’s super important that you understand this list is not advice to trade these stocks. My goal is for you to use this monthly list as part of your education.

In the past I’ve been reluctant to publish a monthly list of ‘hot’ stocks. The stocks I trade move fast. Penny stocks on my watchlist tonight might be gone tomorrow or in a few days. Plus, I rarely hold a stock for more than a day.

My goal as a teacher is to provide you with knowledge and tools. That way you can do your own research and create your own watchlist. Your goal should be to become a self-sufficient trader.

I do provide a daily watchlist to Trading Challenge students. But I make it clear that these are stocks I’m watching. It’s not advice to trade the tickers on the list. Why provide the list?

Two reasons…

1. First, it helps students learn what to look for. History is one of the best teachers — for both active traders and students.
2. Second, I tell students what I’m looking for to make the stock move from just watching to a potential trade. For example, if a stock is up over several days it could be a candidate for a morning panic dip buy.

So, when I give my students the list I expect them to use it as a starting point for further research.

Please heed this advice.

The more research you do, the better you’ll get at it. The more knowledge you have of a stock’s history, the better your chance of anticipating potential price action.

Penny stocks can be highly volatile. In fact, I love volatility. It creates amazing opportunity for traders. Especially traders trying to grow a small account.

If you’re a beginner, please read this post: Penny Stocks for Beginners. It’s essential information on how to get started in penny stocks before you risk your money.

[Disclosure: Some of the stocks mentioned below have been traded or otherwise discussed by Tim Sykes as part of his daily watchlist provided to Trading Challenge, TIMalerts, PennyStocking Silver, and Millionaire Masters Program subscribers. Tim Sykes may or may not hold open positions on these stocks at any given time. This list is not a recommendation to buy or sell any stock. Do your due diligence. Full earnings claim disclosure here.]

The Broader Market

Each month I’ll also give a brief roundup of the broader market. You need to keep up with what’s going on because roughly three out of four stocks follow the overall market. Also, macro events like trade issues with China can affect entire market sectors.

Did We Just See a Double Top?

As I write there’s an overall downtrend in the market since the beginning of May. It’s like that old saying: “Sell in May and go away.” To the day, the top was May 1. You have to take these sayings with a grain of salt but … it’s pretty crazy what’s happened since that day.

To put things in larger perspective, we’ve now had this almost double top going back to the highs of 2018. Which is scary. That said, one China trade-deal away and the market could blast off to new highs.

Here’s a 1-year chart of the S&P 500:

Adapt to the Current Market

During most of May I was sizing down or closing positions before the market close. That’s because one of my favorite patterns, the OTC first green day, wasn’t playing out the same way it did in the past. The morning gap-ups or spikes just weren’t happening.

Throughout May I think I only had one good overnight gap up trading Kraig Biocraft Labs, Inc (OTCQB: KBLB) on May 10 and 13. (It was actually an over-the-weekend hold into a Monday morning gap up).

Although the overall market has trended down, in penny stocks we’ve seen a lot of big spikes. But they haven’t been based on a hot sector, great earnings, or new product announcements. A lot of the big spikes are just short squeezes.

A word of caution before I get to the list…

I don’t memorize patterns. I recognize them. I also recognize when they’re not working. I teach my students to do the same. You need to adapt to the market. It won’t adapt to you. The market doesn’t care about you.

One example is the short squeezes we’ve seen recently. Personally, I don’t like trading short-squeezes. I find trading them difficult. But I have students who’ve banked by going long on breakouts during the squeeze. Some students have waited out the squeeze for nice short plays.

Other traders have not adapted to the markets. Many either got caught in a squeeze (shorts) or thought it would last forever (longs). Newbie shorts, in particular, have gotten absolutely crushed the last few months. The lesson: be willing to adapt to the market.

Timothy Sykes Top Penny Stocks to Watch for June 2019

The stocks below are on the list for the lessons they provide. By the time you read this they might no longer be in play. Or they might be on my backburner watchlist. That’s how penny stocks to watch works. It’s why I love them so much.

Check it out…

Remember those newbie short sellers and the squeezes they’re causing? Our first three penny stocks to watch for June are all up more than normal due to short squeezes.

Each of these stocks had some type of catalyst to start the initial spike. But the continuations are caused by newbie short morons who have no clue what they’re doing. Some people have to learn the hard way. Be grateful, because they’re making it easier for longs who like to trade short squeezes.

Soliton, Inc (NASDAQ: SOLY)

SOLY is one of the latest low priced stocks to go Supernova. This press release on May 28 announced FDA 510(k) clearance for their Rapid Acoustic Pulse (RAP) device. That started the initial spike.

Thanks to newbie shorts who enter way too early, SOLY ran from it’s open at $5.82 on May 28 all the way to $29 in two days. It’s holding in the mid teens as I write. SOLY is no longer a penny stock — for now. We’ll see what the future brings.

The SOLY chart below includes extended-hours trading:

I don’t chase stocks that are up nearly 500% in a couple of days. So, at best, SOLY would be a dip buy off a morning panic for me. It’s a good example of what can happen with a combination of a strong catalyst and over aggressive shorts.

Obalon Therapeutics, Inc (NASDAQ: OBLN)

Obalon is a commercial stage biotech with an FDA approved device for weight loss. It uses a stomach balloon system which reportedly only takes 10 minutes to install.

The stock has had two recent spikes. The first was during after-market and pre-market trading on May 21 and 22. It was based on the release of expanded clinical data. Once again, extremely aggressive shorts got squeezed.

Then the company did a financing on May 23 and the price tanked to roughly the level of the offering — 60 cents a share. On May 29, an unfounded rumor of a takeover bid by Johnson & Johnson (NYSE: JNJ) was published. A classic example of buy the rumor, sell the news. The post has since been removed. Again, newbie shorts got crushed.

Check out the chart:

The stock has held above the $1 mark this time but the long-term chart is terrible, so we’ll see what happens. Obalon announces first quarter earnings this week and they also have cash to burn.

A note on biotech stocks: I’m not a fan. But May and June are the season for biotech stocks because of all the conferences. For example, Obalon presented at the Digestive Disease Week conference in early May.

Watch this 6-minute “Trading With The Tims” video for opposing views on biotechs:

Eltek Ltd (NASDAQ: ELTK)

Eltek manufactures high-tech circuit boards for the defense, aerospace, and medical industries. The stock spiked on positive earnings news on May 29. Thanks to the early newbie shorts, the price ran all the way to a high of $11.56 per share on May 30.

Here’s the chart from the May 29 spike through the first trading day of June:

Eltek has dropped nearly 50% from recent highs. As the market opened this first week of June, this was my top potential dip buy off a morning panic. And although I didn’t take a trade, there was a nice late morning dip buy opportunity on June 3.

Legacy Reserves Inc (NASDAQ: LGCY)

Here’s another company with a terrible long-term chart in a sector I don’t like: energy. But it was the biggest percent gainer in the entire market on June 3.

Legacy Reserves is an oil and natural gas company. They own and operate properties in four U.S. oil regions. But the stock has dropped from a high of $26.39 back in 2014 all the way to 12 cents a share earlier this year. The company was expected by many to file for bankruptcy.

The stock spiked on news of Forbearance Agreements with its lenders. I’ve included both the intraday and the long-term chart. Notice how bad the long-term chart looks. But when a stock spikes with volume like LGCY did on June 3, you have to pay attention.

The chart on the left below is the intraday chart from June 3; the chart on the right is long-term. Notice the HUGE volume spike on the last day of the long-term chart:

At its high of day (HOD) on June 3, LGCY was up 540% — and still managed to close up 320% on the day. I didn’t trade this because I don’t chase stocks up this much. I’ll be looking at this stock for a potential morning panic dip buy. If it gets a big enough dip the bounce could be substantial. [update: LGCY spiking again pre-market as I write on June 4.]

Castor Maritime Inc (NASDAQ: CTRM)

Castor Maritime is a shipping company based in Cyprus. The company appears to be a potential earnings winner, spiking from $5.15 into the mid $8s pre-market on June 4. CTRM is a company with several 1-day spikes since listing on the NASDAQ in February 2019. The company released first-quarter earnings on June 3.

Check out the chart:

Who knows what this one will do, as it’s still unproven in the long-term. It’s a potential buy for me, but only into a big morning panic. On the chart above, notice a couple of things:

• First — trading volume and price movement have been low and boring for the entire month of the chart.
• Second — the volume, while still very low, has spiked along with the price in pre-market trading on June 4. [update: the stock broke $9.00 per share in pre-market trading as I write.

How to Use This List

So many teachers and pundits out there tell you to buy, buy, buy … or sell, sell, sell. They’re doing you a disservice. I could put that in harsher terms but I won’t. For now. I’m not advising you to buy or sell any of these stocks. That would be irresponsible.

So what am I asking of you? I want you to learn from history. Learn from studying the long term charts of these companies. Watch this guide: How To Make Millions to learn what the best patterns are. Don’t just study past price action, learn the best patterns so you know what to focus on.

Also, use StocksToTrade to scan for the best stocks every day. I use STT daily — and it frustrates me when students ask “Tim, where did you find that stock?” Just use it. All my favorite scans are built-in.

Understand why the stocks are moving. Figure out what news moves the stock, and why. Look into the company fundamentals. Get to know them. Some stocks stay on my radar for years. Not as an investment — to trade. I hope you understand the distinction.

Do you keep stocks on your watchlist for days and weeks? Comment below and share your experience. New to trading? How will you use what you’ve learned today to move forward? Comment below — I love to hear from all my readers.