Shorting penny stocks can be just as exciting as buying them. So with Italy raining on the parade today, to make money as a swing trader I look to day trade overbought stocks that have reason to take profits on days like today. I’ve already confirmed with my preferred broker that there are shares to short of these 3 stocks up over 500% collectively over the past few weeks.
Lithium Exploration Group (OTCBB:LEXG) was quite possibly the greatest pump we’ve see in quite some time. Last April it ran from $.12 to $10.68 on a $3 million promotional budget before collapsing $7 in one day. After 6 quiet months of decline to $.45 this worthless stock is at it again. My guess, just some long term shorts covering big profits with momentum buyers joining the party. In no way do I think LEXG is setting up for another big run which is why this horrible stock is top my short list. Right now I’ll let it squeeze and look for entry once the Relative Strength starts to turn down on declining volume. The price is up 256% in 6 days without any major news.
Longwei Petroleum Investment Holding (AMEX:LPH) has doubled from its October low of $.82 and is not starting to see resistance have an effect on the price just below the 200 Moving Average. Wednesday was the first day we saw declining volume as the Relative Strength started to level out suggesting a dip could be coming. Trading range for me would be $1.70 – $1.90 down to $1.46 to $1.25. The current move back up the chart appears to be from Longwei withdrawing a $50 million shelf registration.
Spanish Broadcasting System (NASDAQ:SBSA) is up almost 200% in 3 days and is clearly just below price action resistance from back in August and September. Probably a little too early to the dance here but I do like shorting right at resistance, say $3.30, because if the stock continues up there is a clear exit plan in place making for a small loss. Good risk reward there in my opinion giving the 50 Moving Average is at $1.86.