I watch a lot of penny stocks for my free Penny Hawk e-letter readers. And when I see something that looks profitably promising, I let ’em know.
I’ve had my eye on one in particular for more than a week now.
For a penny stock, its market cap is on the bigger side, at $864 million, and shares trade for just $8. It builds materials designed to boost Internet speeds and beef up the amount of traffic the lines can carry.
The stock itself is showing me an absolutely beautiful technical setup that I think points to predictable profits – with a high likelihood of a much bigger breakout before long.
Let’s take a look at the chart…
This Is a Fantastic, High-Profit Setup
The stock I’m talking about is Lightwave Logic Inc. (OTC: LWLG), based out of Englewood, Colorado.
Shares had moved above their 50-day moving average, but then fell down below their lower Bollinger band.
It seemed like LWLG would go as low as $4… until an interesting technical move happened: That $4 level seemed tasty to investors, and it drew volume from the market, and the stock regained support.
Which means right now we have a prime opportunity to move into this stock and make a predictable profit and, like I said a minute ago, the shot at a much larger breakout.
Bouncing back from that $4 support level, shares are now breaking above their 20-day moving average.
The $8 to $8.91 gap provides a nice 11.4% return – and we’re going to take it.
But if it breaks above its 50-day moving average at $8.91, this will mean that the stock could break above its top Bollinger band.
The last time this happened, LWLG went parabolic.
Which is why today, you’ve got a chance to parlay an 11.4% gain into a potential 50% return.
The stock is looking tasty again, for sure; the charts and data are drawing in more buyers, and today, before the market closes, you want to be in position to profit.
Now, this is a penny stock – one that’s moved quite a lot recently, as these stocks will do – but my secret weapon for raking it in (and keeping it) on small, volatile stocks, is the trailing stop. It’s so easy to use that I can’t imagine why everyone doesn’t use them. It’s a stop that moves with the stock, making it a cinch to protect your principle as you capture profits.
Here’s what to do.
Buy LWLG shares at market, and immediately enter a 7% trailing stop – I’m talking as soon as you open the position. This’ll protect you in case the stock fails to punch through that 20-day moving average, which could result in a re-test of the $6 level.
— Chris Johnson
Source: Money Morning