All told, 90% of the stocks we’ve featured have given investors the chance to profit in the weeks since recommending them. That’s a significant success rate given the fact that the market has remained more or less flat over that time.

The key to successful small-cap trading is taking smart entry and exit points. That means buying shares when they cross a significant technical threshold (which I usually point out in each stock’s blurb) and selling when they cross another. We’ll take a closer look at successful trading strategies in a future issue…

In case you’re not familiar, each week, the Penny Sleuth takes a look at a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

As usual, while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers again this week, giving you the chance to offer up more speculative penny stock plays.

Check out the comments after this article to get a glimpse at a slew of new user-submitter penny stock picks — and the chance to submit your own!

First, though, let’s take a look at this week’s breakout penny stocks worth watching…

Penny Stocks 2010

Matrix Service Company (NASDAQ: MTRX) – Construction and maintenance contractor Matrix Service Company serves clients in the energy industry. But the company’s stock could be serving long-side shareholders if a bullish inverse head and shoulder pattern plays out. Wait for a bounce off of shoulder level at $11.50 before considering going long this issue.

Provectus Pharmaceuticals (OTC: PVCT) – This small-cap pharmaceutical company is looking potentially bullish right now thanks to a pennant continuation pattern that’s formed in the stock’s chart. That pattern suggests an upside price target of close to $1.90 – an almost 40% upside swing. Don’t take the trade until it breaks above the pennant’s resistance level.

Eastern American Natural Gas Trust (NYSE: NGT) – This natural gas trust, which owns stakes in 650 producing gas wells and 65 development wells in West Virginia and Pennsylvania, could be on the verge of a technical breakout right now. Shares have been forming an ascending triangle for a few months now – one that could spell a big jump on a break over $23.90.

Global Crossing Ltd. (NASDAQ: GLBC) – Bermuda-based communication service provider Global Crossing could be in store for some gains with an ascending triangle forming right now in the company’s stock chart. But this pattern’s still a while from coming to fruition, so hold tight and wait for a break above resistance to make your stake.

Share Your Penny Stock Picks…

Once again, we’re going interactive this week…

Just post your best penny stock pick below in the comments section of this week’s Watchlist by Friday, March 19.

Cheers,
Jonas Elmerraji
Managing Editor, Penny Sleuth

March 15, 2010

Penny Stocks for 2010: MTRX, NGT, GLBC, PVCT was originally featured in the Penny Sleuth.

With that in mind, here’s a glimpse at the top-performing penny stocks for 2010 – and a look at how we can use their attributes to fuel more gains this year…

We live in a world where a bevy of financial information is available to us freely if we’d only look. With a couple of keystrokes, anyone with the internet can look up detailed stock information on Google Finance, a sophisticated technical candlestick chart on Stockcharts.com, or up to the minute financial news on Bloomberg. That sort of access has significantly squeezed the gap between individual investors and the big boys on Wall Street – but the information itself isn’t going to pave the way to gains… you have to use it too.

That said, let’s take a quick look at the 10 best-performing penny stocks for the year so far, and try to see a common denominator that’s tradable:

Top 10 Penny Stocks of 2010

Jazztel (OTC:JAZTF) – Shares of this Iberian data transmission company spiked sharply in early February on speculation over a potential takeover.

Remy International (OTC:RMYI) – Aftermarket auto parts manufacturer Remy International saw shares dive in late December, only to be followed by a colossal rally in January.

Geospatial Holdings (OTC:GSPH) – this tiny pipeline management company saw shares make a big move back in February when the company was featured in Time Magazine, and again earlier this month when it made an appearance in Wired.

Graham Packaging Company (NYSE:GRM) – This $665 million packaging company saw its stock price move after a significant earnings release.

Somaxon Pharmaceuticals (NASDAQ:SOMX) – While tiny drug developer Somaxon has paid stock promoters to pump its stock in the past, this year’s pop was more above board – it was predicated on some FDA news on its newest drug.

China Swine Genetics (OTC:CSWG) – This bizarre Chinese pig breeding stock got legs – and the attention of traders – when it was featured on a prominent penny stock promotion website.

Wave Systems Corp. (NASDAQ:WAVX) – Like China Swine, this tiny semiconductor play got additional trader attention when it was picked up by penny stock promoters.

Tuesday Morning Corporation (NASDAQ:TUES) – This name should sound familiar to Sleuth readers… I put this play on our Monday Watchlist following a technical breakout. I hope you took my advice — the company has rocketed 122% since then.

RESVERLOGIX Corp. (PINK SHEETS:RVXCF) – This extremely volatile pink sheets stock has become a favorite of traders after its cholesterol drug got courted by some big pharma companies.

Wabash National Corp. (NYSE:WNC) – Wabash National, a small-cap truck trailer manufacturer got additional coverage after it signed a significant deal.

Connecting the Dots

Although these ten companies seem pretty different, there are a couple of dots worth connecting. For starters, each of them moved quickly on a catalyst that was difficult to predict. Who would have known that a major drug would get approved or that a company would see amazing earnings growth? But even though 2010’s top gaining penny stocks didn’t give many hints to investors, three things could have increased your probability of catching one of them.

1. Don’t Shoot for the Top Gainers

While it sounds anti-intuitive, trying to search out one of the top gaining stocks is a great way to lose your shirt in the market. That’s because these plays are volatile and they move quickly – in both directions. Instead, focus on getting repeatable moderate gains on a consistent basis, as we try to do each week with the Monday Watchlist. Making 9% in a week on a diversified basket of penny stocks is much more desirable than making 500% per year on a single risky play… Focusing on high-probability trades increases the chances that you’ll run into a top gainer on your own (like we did with TUES).

2. Stick With a Strategy

Be it technical or fundamentals-based, you need to have a strategy before, during, and after you make a trade. After all, it’s futile to try to bank consistent trades unless you have a system that works on a repeatable basis. This is perhaps the toughest step toward penny stock profits since not everyone has the financial acumen to piece together a trading system. Luckily, we’re here to help…

3. Look for the Telltale Signs for Gains

Even though the biggest gains are typically impossible to predict there are telltale signs that can help you find the stocks that are most likely to produce a big pop. First of all, focus on OTC stocks. While OTC plays may be a bit riskier than their exchange-traded brethren, they also accounted for 40% of 2010’s top gainers. Also, focus on industries, like pharmaceuticals or semiconductors, that are prone to big, fast news-based gains. And be vary weary of stocks that are being promoted by paid pumpers… (More on that in Saturday’s Weekend Sleuth)

There’s no question that finding the next triple-digit gaining penny stock is a tall order. With tons stock promoters pumping their latest clients’ stocks, small-time investors opining their latest trades, and brokers trying to nickel and dime you on commissions, it can be overwhelming. But by taking a look at penny stock plays that actually made massive gains in 2010, we can better prepare ourselves to make sizable gains in the future.

Cheers,
Jonas Elmerraji
Managing Editor, Penny Sleuth

March 11, 2010

The Top 10 Gaining Penny Stocks for 2010 was originally featured in the Penny Sleuth.

That’s been especially true in 2010 as numbers missed expected targets for most of the year. But with indexes finally creeping into positive territory this week, the potential for  a fundamentals-fuelled rally is once again real. And that means a whole lot more for small-cap investors…

That’s because investing in the right small-cap stocks can significantly multiply your gain potential. Last week, while the S&P gained its paltry 3.1%, our watchlist picks jumped an average of 10.16% — that’s serious movement for only five trading days. That’s like making 528% annually on your portfolio – or, when compounded, enough to turn $1,000 into $142,043 in a single year.

With that in mind, let’s move on to this week’s watchlist.

In case you’re not familiar, each week, The Penny Sleuth takes a look at a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

As usual, while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers again this week, giving you the chance to offer up more speculative penny stock plays.

Check out the comments after this article to get a glimpse at a slew of new user-submitter penny stock picks — and the chance to submit your own!

First, though, let’s take a look at this week’s breakout penny stocks worth watching…

LMI Aerospace (NASDAQ: LMIA) – Small-cap aerospace company LMI Aerospace provides design engineering and structural assembly services to the defense and aerospace technology markets. Since October shares have been forming a bullish ascending triangle pattern, which suggests share could move significantly higher on a break above the $14 level. Don’t consider making a move until then…

Bank of Kentucky Financial Corp (NASDAQ: BKYF) – Small regional banking stock Bank of Kentucky Financial Corporation broke out above its 50-day moving average last week, a move that clears the stock to higher ground in the short-term. With a strong resistance level at $22 right now, a break above that price could make for a double-digit gain in March.

Suffolk Bancorp (NASDAQ: SUBK) – Suffolk Bancorp is another small banking play that hit my radar in this morning’s pre-market. The stock broke above a significant resistance level at $30.50 in Friday’s trading, and is confirming that level already this morning. As long as we see a close above $30.50 today, we could be in store for a big upside play later this week.

W&T Offshore (NYSE: WTI) – Our sole short side play this week is W&T Offshore, an independent natural gas exploration company. Shares have formed the dreaded head-and-shoulders pattern in the past few months, signaling to investors that selling time could be coming up. A break below shoulder level is our trade trigger on this play.

Share Your Penny Stock Picks…

Once again, we’re going interactive this week…

Just post your best penny stock pick below in the comments section of this article by Friday, March 12.

Submit your own breakout penny stock pick for March 2010 below…

Cheers,
Jonas Elmerraji
Penny Sleuth

March 8, 2010

4 Technical Patterns to Watch for a Penny Stock Breakout was originally featured in the Penny Sleuth.

[Ed. Note: We’re not trying to put a price on the recent natural disasters. In fact, Agora Financial has donated more than $82,000 to the relief efforts in Haiti. But we’re committed to bringing you a diverse range of investment ideas – including today’s.]

I understand that risk-reward is in my favor if I remain calm, collected and prepared when others panic and waver – and you can too…

Here are the three earthquake and tsunami stocks I’m watching this week:

Teledyne Technologies Inc. (NYSE: TDY) acquired Benthos which jumped 70% during the 2004 tsunami as the company makes a component of a tsunami warning system…A years’ old press release reveals these tsunamis are great press for this technology even if the stock is probably too large to move much… This stock is a potential buy.

Taylor Devices Inc. (NASDAQ: TAYD) is the stock, as I detail in my book An American Hedge Fund, that I made $200,000+ on in one day (after losing over $100,000 the previous day by shorting too early) back in 2004 as they make earthquake absorption equipment…their website describes that Taylor Dampers literally soak up the energy of earthquake induced motion, preventing structural damage… This stock is a potential buy, although if it does spike, it’ll probably be too quick so it’ll make a better short after the momentum wears off (learn from my ultimately successful but hugely flawed 2004 trade).

Sutron Corp (NASDAQ: STRN) makes tide stations, which monitor the seas and can detect storm surges and tsunamis… Keep in mind that Sutron’s stock is illiquid, but the chart is still steady enough to justify a trade. We’ll need to see trading volume surge to make it worthwhile.

Sincerely,
Tim Sykes, TimothySykes.com
for Penny Sleuth

March 3, 2010

Three Earthquake and Tsunami Stocks to Watch in March was originally featured in the Penny Sleuth.

The real problem now isn’t the numbers themselves – it’s the expectations.

We’ve just come off the heels of one of the worst economic bubbles in our history, and many on Wall Street expect a return to the same old way they did business… the way that got us in trouble in the first place. Any real recovery is going to take time, and until analyst expectations reflect that we’re going to see disappointing results when numbers are released.

That said, companies have seen an uptick in consumer sentiment, increased profitability, and reasonable valuations once again. With that in mind, we’re going to take the fundamentals out of the equation today once again and look out for some of the best breakout penny stock plays for March 2010 on the market right now.

In case you’re not familiar, each week, The Penny Sleuth takes a look at a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

As usual, while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers again this week, giving you the chance to offer up more speculative penny stock plays.

Check out the comments after this article to get a glimpse at a slew of new user-submitter penny stock picks — and the chance to submit your own!

First, though, let’s take a look at this week’s breakout penny stocks worth watching…

Red Robin Gourmet Burgers (NASDAQ: RRGB) – It isn’t just this restaurant chain’s menu that’s delicious… right now shares could be in for a bullish setup that could deliver some tasty profits in the coming week. In the second half of 2009, Red Robin formed a bearish head and shoulders pattern that provided a textbook-perfect short play. Now, with shares rebounding in a tight trading channel and a bullish moving average crossover in the wings, we’re betting on shares moving higher.

Gruma S.A.B. de C.V. (NYSE: GMK) – This Mexican tortilla and flour producer isn’t a stranger to our small-cap watchlist. In addition to providing a recession-resistant product in a volatile country, shares of the Nuevo Leon-based food processor are sitting at the bottom of an uptrending channel – a good spot to make a long-side bet.

Netgear (NASDAQ: NTGR) – Networking product company Netgear is benefiting in a big way from a breakout above its trend channel, a move that clears the company to higher ground. The $893 million firm has been riding a wave of improved analyst sentiment in the last month, and this latest breakout could make Netgear a winner in the coming week.

Quality Distribution (NASDAQ: QLTY) – We’ve talked about Quality Distribution in the past here at the Penny Sleuth. For a while now, the micro-cap trucking stock has been forming a bullish ascending triangle pattern. Wait for a breakout above current resistance, and this stock could be in store for a breakout ride.

Share Your Penny Stock Picks…

Once again, we’re going interactive this week…

Just visit the Penny Sleuth website, and post your best penny stock pick in the comments section of this week’s Watchlist by Friday, March 5. The two readers with the best performing picks each score a Penny Sleuth Prize Package that includes a special edition DVD of I.O.U.S.A.

Submit your own breakout penny stock pick for March 2010 below…

Cheers,
Jonas Elmerraji
Penny Sleuth

March 1, 2010

Four Breakout Penny Stock Charts for March was originally featured in the Penny Sleuth.

The greatest examples of this come from the world’s two wealthiest men: Bill Gates and Warren Buffett.

These two have made their billions in very different ways. Gates invented the means we’re using to write these words (Microsoft Word)…His software has netted him over $50 billion to date.

Buffett simply bought the rights to future earnings in everything from GEICO Insurance to Coca-Cola stock. He invested in these companies and their copyrights. Today, we’re going to go one step farther…

While we are going to recommend you buy shares of a company, we are really recommending you buy royalty rights to another’s invention.

The history of royalty rights law is long and brutal. One of the earliest cases of royalty disputes took place in A.D. 561 between St. Finnian of Moville and St. Columba of Iona.

At the famous Clonard Abbey in Cluain Eraird, Ireland, St. Finnian lent his pupil Columba a psalter, or psalm book. Columba copied the book and a dispute over who had rights to that copy erupted, leading to the Battle of Cul Dreimhne, where more than 2,000 men were killed.

In recent history, a much less bloody royalty dispute broke out between Paul McCartney and Michael Jackson over rights to many Beatles’ songs. These rights are estimated to be worth as much as $500 million.

Battles like this — in all likelihood — will continue to be fought for centuries…the royalties due on pirated music being the most hotly contested copyright dispute these days.

The never-ending fights over royalties make it clear just how lucrative they can be.

The most profitable example that comes to mind is the song “Happy Birthday to You.” Warner Music Group owns the rights to this song and collects around $2 million just from royalties every year.

Today, we have a less controversial — yet equally lucrative — opportunity for you…

The Oil Mine Royalty Play That You Can Buy Right Now…

Mesabi Trust (NYSE: MSB) is a $244 million royalty trust that holds interest in iron mines. Mesabi exists for one sole purpose – to collect income on the trust’s 1.5 billion mineable tons of iron ore reserves.

That has resulted in pretty sizable distributions to shareholders. The trust currently yields 11.9% annually – an amount that’s considerably higher than you would have netted in the broad market over the last several years time.

Mesabi’s stable yield has resulted in significant price appreciation in 2010. But that shouldn’t scare you away from shares. Remember, I’m advocating buying this royalty trust for the income it provides, and with an 11.9% yield right now, that income more than justified current share prices.

I’ll be writing to you next month with some more small-cap dividend plays. Until then, happy investing.

Sincerely,
Jim Nelson

February 23, 2010

How to Collect Massive Royalty Income Checks from a Penny Stock was originally featured in the Penny Sleuth.

The traders are right to be less than bullish right now. The 50-day moving average is acting as a potentially tough resistance level right now for the S&P 500 index – one that stocks could have trouble surmounting given the mixed economic fundamentals of 2010. If we can breach the 50-day, however, the market could be ready for another rally leg.

Today is going to be the biggest tell given that the market is threatening to open right on the 50-day. Pay attention to where trading ends at 4:00 p.m. today; that’s the best indicator of how to play things. Whichever way stocks go this week, we’re setting up once again to make some loot with some potentially favorable penny stock plays.

In case you’re not familiar, each week, The Penny Sleuth takes a look at a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

As usual, while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers again this week, giving you the chance to offer up more speculative penny stock plays.

Check out the comments after this article to get a glimpse at a slew of new user-submitter penny stock picks — and the chance to submit your own!

First, though, let’s take a look at this week’s breakout penny stocks worth watching…

Fred’s Inc. (NASDAQ: FRED) – Memphis-based Fred’s operates close to 7,000 discount stores in the southeastern U.S. The chain, which focuses on serving mid-to-low income families in small towns, could make for a good play this week with a breakout above two key levels on Friday. Shares broke out above the 50-day moving average and downtrending resistance, two levels that threatened to quell Fred’s recent rally. Now, with shares unbridled above that level, the potential for a significant gain is real. Wait for a second consecutive close above the blue lines before considering taking the trade.

Solutia, Inc. (NYSE: SOA) – If you’ve been following our daily watchlists, chemical maker Solutia shouldn’t be an unfamiliar name to you. On Thursday, I told you about the bullish ascending triangle that was forming in shares of the stock, a pattern that continues to be compelling right now. A breakout above horizontal resistance marks the “buy” signal on this stock… it’s just not there yet.

Navigant Consulting (NYSE: NCI) – Our sole short-side play this week is Navigant Consulting, a specialty consulting firm that assists companies address risk uncertainties. One risk uncertainty that management hasn’t addressed is the bearish head and shoulders pattern that’s already formed in shares. The trigger to bet against this stock is a breach of the blue shoulder line above.

ESCO Technologies (NYSE: ESE) – ESCO Technologies is an engineered product producer that’s based in St. Louis, Missouri. The company’s shares are currently being bounded by a triple top on the upside and a double bottom on the downside – a set-up that gives us significant protection right now. With a breakout above downtrending resistance in play, this stock could be headed higher this week.

Share Your Penny Stock Picks…

Once again, we’re going interactive this week…

Just visit the Penny Sleuth website, and post your best penny stock pick in the comments section of this week’s Watchlist by Friday, February 26. The two readers with the best performing picks each score a Penny Sleuth Prize Package that includes a special edition DVD of I.O.U.S.A.

Submit your pick below…

Cheers,
Jonas Elmerraji

February 22, 2010

February’s Technical Penny Stock Plays was originally featured in the Penny Sleuth.

Buying a stock on the NYSE is relatively easy. Nine times out of 10, you can put in a market order that will be immediately filled right at the price you want. But bulletin board issues and some of the thinner micro-caps on the NASDAQ and Amex can be a completely different animal.

When I find a penny stock that fits my buying criteria, I first look to see how it trades. If I feel the stock has enough regular trading volume, I know I should have no problem picking up shares on the open market at a favorable price. But if the stock is thinly traded, I never try to buy shares without using a limit order.

It all comes down to volume. More buyers and more market makers facilitate frequent trading, with a much smaller gap between how much a buyer is willing to pay–and how much a seller is willing to take for his shares. The smallest stocks on the market rely on fewer market makers, and can sometimes go hours or even days, without a single trade. That’s why it’s so important to be careful and trade smart.

Here are three quick tips to help you buy penny stocks at the price you want to pay…

1. Always check the bid and the ask. Every major online brokerage I’ve checked out has tons of extra features you probably won’t find on the free financial websites out there. One of the most useful tools for the microcap trader is the real-time quote window. Pull it up and you can easily see the bid and the ask. This will give you a clear picture of how much you should pay for a stock before you buy. Remember, the current price of the stock is not necessarily the price you will need to pay to pick up shares. This number is simply the price at which the last transaction occurred.
2. Unless you’re planning to make a quick trade, be patient! Simply put, you can sometimes get a better price by waiting. If there’s an unusual amount of buying in the early morning, it will usually calm down after the first half hour of trading. This “rule” isn’t carved in stone, but it is a helpful tip that could help you save a little money on your next trade.
3. If you’re making a longer-term investment, build a position over time. You’re not looking to trade, so what’s the rush? Build your positions over days or weeks, instead of putting in a huge order. You’ll have a better chance of getting smaller orders filled right away.

Follow these tips every time you buy penny stocks, and you’ll have the opportunity to make more money. After all, isn’t that what it’s all about?

Sincerely,
Greg Guenthner

February 19, 2010

3 Trading Essentials to Improve Your Penny Stock Buying Strategy was originally featured in the Penny Sleuth.

In case you’re not familiar, each week, we take a look at a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

As usual, while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers again this week, giving you the chance to offer up more speculative penny stock plays.

Check out the comments after this article on the Penny Sleuth website to get a glimpse at a slew of new user-submitter penny stock picks — and the chance to submit your own!

First, though, let’s take a look at this week’s breakout penny stocks worth watching…

Ruby Tuesday (NYSE: RT) – Investors are hungry for gains right now… Those gains could come courtesy of a different kind of hunger: hungry consumers. Restaurant chain Ruby Tuesday is fast approaching a key resistance level right below $8.00 per share. If shares can push above that level, expect a rally past $9.00 in the immediate term. Wait for that “buy” signal before going long.

Ocwen Financial Corp (NYSE: OCN) – Asset manager Ocwen Financial has been rallying hard over the course of the last week or two. But significant resistance at $10.50 presents an interesting trade for us. If Ocwen can break the $10.50 level, expect a rally to the 200-day moving average – otherwise, count on shares to tumble back down to $9.59.

Seahawk Drilling (NASDAQ: HAWK) – Things are looking good for Seahawk Drilling. The Houston-based oil service company recently broke out above downtrending resistance, and confirmed support at that level on Friday. Expect shares to move higher this week assuming a second consecutive close above the blue line today.

Media General (NYSE: MEG) – Diversified media company Media General isn’t having as strong of a technical outlook as its investors hoped for. In fact, with a descending triangle forming in the stock right now, things look pretty bearish. That’s why this play is our downside play for the week. Wait for a breach of support before betting against this stock.

Share Your Penny Stock Picks…

Once again, we’re going interactive this week…

Just post your recommendation in the comments section of this article between now and the market’s close on Friday, February 19 to share your favorite penny stock play with the rest of the world.

Cheers,
Jonas Elmerraji

February 16, 2010

Four Charts with Market-Beating Potential was originally featured in the Penny Sleuth.

After all, 2009 started off on an even sourer note, only to be followed by one of the strongest rally years in history…

This week we’re going to try to capitalize on any hint of a reversal with our weekly Penny Stock Watchlist… we’re also going to take a look at a downside play just in case this week fails to live up to investors’ expectations.

In case you’re not familiar, each week, we take a look at a list of penny stocks that are exhibiting abnormal volume, strong technicals, upcoming news, or another catalyst that suggested they might be making a material move in the coming week.

As usual, while our Watchlist errs on the safe side of small-caps, using technical analysis to tell us where a stock is headed, we opened the comments up to readers again this week, giving you the chance to offer up more speculative penny stock plays.

Check out the comments after this article to get a glimpse at a slew of new user-submitter penny stock picks — and the chance to submit your own!

First, though, let’s take a look at this week’s breakout penny stocks worth watching…

Beach First National Bancshares (NASDAQ: BFNB) – Shares of this tiny regional banking stock broke out last month, hitting resistance right around the $1.20 level. But consolidation right under resistance right now suggests that shares could stage another breakout in the short term. Still, stay away from shares until a close above the black line.

R.G. Barry Corp (NASDAQ: DFZ) – I know, this isn’t the first time DFZ has made our watchlist… But with shares continuing to form a picture-perfect ascending triangle pattern, the imminence of a breakout should make the wait well worth it. Don’t consider going long until the trigger set last week is breached.

Ebix, Inc. (NASDAQ: EBIX) – E-commerce software provider Ebix is this week’s downside play. Shares of the company have been set on a bearish head and shoulder pattern for several months now, and a breakdown below shoulder level last week could turn into some palpable gains this week. Wait for a confirmation bounce down off of the blue line before taking the trade.

Quality Distribution, Inc. (NASDAQ: QLTY) – This trucking company bounced off of its 50-day moving average during Friday’s trading. That move should set us up for some upside movement to start this week.

Share Your Penny Stock Picks…

Once again, we’re going interactive this week…

Just post your recommendation in the comments section of this article between now and the market’s close on Friday, February 12 to share your favorite penny stock play with the rest of the world.

Cheers,
Jonas Elmerraji

February 8, 2010

Four More Stocks with Gain Potential in February: QLTY, DFZ, BFNB, EBIX was originally featured in the Penny Sleuth.