Examining Penny Stocks with Technical Analysis for October 2022

Examining Penny Stocks with Technical Analysis for October 2022

Technical analysis (TA) involves the careful study of a stock’s chart patterns and trends. Although this set of skills may seem daunting at first, even beginners can incorporate a few select TA methodologies into their investing strategy to great success. TA can be especially helpful when predicting the movements of penny stocks because of their volatility—provided there is enough trading volume to back up the patterns you’re trying to find.

Below, you’ll find a list of some penny stocks with interesting technical setups. Remember to move quickly and exit your position if the stock isn’t behaving how you expect it to, because this may mean that the trend or signal has changed or failed.

Some of the setups described below may no longer be relevant or intact as of when you read this article. Please conduct your own due diligence. Please note that penny stocks are notoriously volatile.

New Stocks to Watch

Compugen Ltd. (CGEN)

Compugen Ltd. (CGEN) is a micro-cap stock in the healthcare sector. As a biotech company, it engages in the research, development, and sale of therapeutic and diagnostic biomarker products. These include proteins and monoclonal antibodies.

CGEN reached a high of $19.90 in August 2020. After that, it began a pronounced downtrend that it has yet to recover from. The stock’s price fell to a low of $0.66 in September 2022. It has been in oversold territory on the relative strength index (RSI) since January 2022. Although there is still a possibility that CGEN might make new lows, the price is showing a positive divergence from the moving average convergence divergence (MACD). As price is making lower lows, the MACD is rising and thereby not confirming.

California Amplifier, Inc. (CAMP)

California Amplifier, Inc. (CAMP) is a micro-cap technology company with a market capitalization of $145 million as of Oct. 3, 2022. It is engaged in the provision of wireless access and computer technologies.

In May 2021, CAMP stock began its rollover. From a high of $14.51, it fell to a low of $3.82 in September 2022. It should be noted that this low is around the prior lows of March 2020. Traders should therefore be watching carefully to see if the price level will hold. If it does, as the positive divergence with the MACD suggests it might, this could be the beginning of a rebound for this beaten-down stock. However, there are no guarantees in technical analysis. The stock needs to do a lot more work to prove itself worthy of a long position.

LiveOne, Inc. (LVO)

LiveOne, Inc. (LVO) is a digital media company with a market capitalization of about $60 million as of Oct. 3, 2022. It engages in the acquisition, distribution, and monetization of various forms of media including live music, internet radio, podcasting, music streaming, and video content.

On March 22, 2021, LVO touched a high of $6.95. On June 1, 2021, the stock attempted to test the prior highs but failed. This was to be the start of its current downtrend. The stock fell to a low of $0.56 on May 9, 2022. After a brief rebound, LVO seems to be retesting its prior lows. If the price holds around current levels, then this stock could be worth another look.

Great Elm Group, Inc. (GEG)

Great Elm Group, Inc. (GEG) is a holding company in the financial sector. It provides investment management and real estate management services. At a market capitalization of $60 million, it is a micro-cap stock.

GEG’s price chart is showing that support is holding. After retreating from highs of $2.50 in July 2022, the stock fell sharply to a low of $1.82 in July 2022. Price recovered slightly and has been hovering around its 50-day moving average ever since. This could be a sign of accumulation. Waiting for a breakout out from this sideways pattern to decide on a trade could be a good strategy.