Tuesday was a sea of red in the OTC Markets. Most of the recent high flyers all gave up ground. Unfortunately, we don’t think the bottom is in yet. We are not seeing capitulation or a bounce. We want to see some sign that the selling pressure is over. This trading action is shaking out the nervous longs and with the big gains we have seen across the board, more selling is likely.
In this article, we are going to provide updates on some of our recent penny stock winners: RSCF, SFOR, TSNP, MVIS, and AVXL. We are also going to discuss the merger of Tilray and Aphria. If these two cannabis plays do merge, it could start an M&A boom across the sector.
How to Trade Penny Stocks
First up, it’s important to understand that trading penny stocks are not the same as trading blue chips. As we have stressed repeatedly to our subscribers, the key to trading penny stocks is finding momentum BEFORE it happens and then be patient.
Now, when we say that we find momentum BEFORE it happens, we are swing traders looking to position our subscribers BEFORE the move happens. This is where the big money is made and why so many of our subscribers are sitting on gains of over 8900% in ENZC and over 22,400% in TSNP.
If you want to day trade, this is not the place for you. If you want to make a few hundred bucks and then lose a thousand dollars the next day, we hear Tim Sykes has plenty of openings.
We always alert our subscribers first before we publish for our regular readers. This is the value of having a subscription to Insider Financial, which you can sign up for here. We alert our subscribers with our best ideas before our regular readers.
RSCF topped out at $3.30 on the 14th and the selling has been relentless ever since. This is a classic case of a company putting out a PR that does more damage than good.
RSCF issued a PR on December 14th saying that the company had been granted another patent. However, this is not what the market wanted to hear. Patents are great, but they do nothing now. RSCF made things worse by adding this part.
We are still awaiting response from Operation Warp Speed, a FEMA contractor, and other organizations, from who we have received inquiries for our Cryometrix S-90 cryogenic shipping and storage system.
The run-up in RSCF was due to speculation that its technology could be used to transport and store the Pfizer vaccine. With RSCF not even getting a call back from Operation Warp Speed that is coordinating the distribution of the vaccine, RSCF effectively burst the bubble in its own stock price.
SFOR is down simply on profit-taking. In the span of five days, the stock ran over 6000%! Selling was inevitable as those like our subscribers booked profits.
We wrote up SFOR on October 27th when the stock was trading at just $.0044 a share, which you can read here. We said at the time:
Now that the company has signaled that it has come up with more attractive financing, we can see SFOR stock run. In this article, we take a look at SFOR stock and make the bull case why there’s more room to run.
Profit-taking was inevitable; however, the play in SFOR is still good. The company is making all the right moves. SFOR just announced that it would be filing a Schedule 14C to reduce its Authorized shares from 14Billion to 4Billion common shares and a few other annual items.
SFOR is also releasing its SafeVchat for the video conferencing space on December 18th. The company also said:
“We also do not plan on doing any reverse stock splits in the future based on the current market. We also expect to further grow the company in Cyberspace with our total of now seven patents and five security products, during a pandemic and a great time for providing security, especially from home.”
Some nervous longs got rattled yesterday in TSNP after an anonymous short-seller released a short and distort attack on Seeking Alpha. You are more than welcome to read it here, but it offered no concrete evidence. It was simply hearsay and the writer’s opinion.
For the past few weeks, all the real action has been on the OTC Markets. Penny stocks on the NASDAQ and NYSE have been mostly disappointing. We weren’t getting the multi-day runners that we like to find.
One penny stock that just broke out to the upside is MVIS. We profiled MVIS in August, which you can read here when it was trading at just $1.25 a share. It’s taken a few months, but subscribers are now up 236%.
The reason for the run in MVIS is its valuable patent portfolio and takeover speculation. Google, Facebook, Amazon, Apple, Microsoft, and many, many other companies need to strengthen their Lidar/AR/VR capabilities. Here MVIS stock is a market leader.
Microvision has over 450 issued patents, pending patents, and licensed patents worldwide. This patent portfolio is very, very valuable. No doubt one or more of the companies above are already infringing on Microvision’s patents already.
We said back in October that AVXL was ready to make a big move, which you can read here. We have said time and time again that ANAVEX2-73 is one of the most promising drugs in development. Yesterday’s results prove this.
AVXL is running on the back of positive top-line results from a Phase 2 trial evaluating ANAVEX2-73 (blarcamesine) in adult female patients with Rett syndrome.
Efficacy endpoints demonstrated statistically significant and clinically meaningful reductions in Rett syndrome symptoms and correlated with changes in biomarker. 66.7% of ANAVEX2-73 treated subjects showed a statistically significant improvement in drug exposure-dependent Rett Syndrome Behaviour score response as compared to 10% in placebo. 86.7% of patients in ANAVEX 2-73 arm showed a sustained improvement to treatment, as compared to 40% in the placebo arm.
The primary endpoint was safety. Adverse events were similar between Anavex2-73 and placebo, with no reported serious adverse events. The company is planning to meet with the FDA to discuss steps to approval.
Tilray Aphria Merger
Tilray and Aphria are merging to create a $4 billion market cap cannabis player. The merged company will be called Tilray and continue to trade under the symbol TLRY.
Under terms of the deal, Aphria owners will receive 0.8381 shares of Tilray for each Aphria share they own, while Tilray owners will continue to hold their shares. Aphria will own about 62% of the combined company at close at about a 23% premium to Tilray’s close yesterday.
“The Combined Company, supported by low-cost, state-of-the-art cultivation, processing, and manufacturing facilities, will have a complete portfolio of branded Cannabis 2.0 products in Canada. Internationally, the Combined Company will be well-positioned to pursue growth opportunities with Aphria’s medical cannabis and distribution footprint in Germany, and Tilray’s European Union Good Manufacturing Practices (“EU-GMP”) low-cost cannabis production facility in Portugal, which has export capabilities and tariff-free access to the European Union (“EU”) to meet increasing global demand for medical cannabis. In the United States, the Combined Company will have a strong consumer packaged goods presence and infrastructure with two strategic pillars, including SweetWater Brewing Company (“SweetWater”), a cannabis lifestyle branded craft brewer, and Manitoba Harvest, a leading hemp food manufacturer and a pioneer in branded CBD and wellness products.”
We see this merger as a positive for the cannabis space. We see this merger lifting cannabis stocks on the OTC like CBDD, CBDL, and CBGL. All three of which has been beaten up as late and could see a nice bounce.
Investors shouldn’t panic when markets sell-off. Sell-offs are inevitable. This has been a tremendous year for many penny stock investors and some want to lock in some profits before the New Year.
We also expect some selling come January when more investors book profits. Many, like us, do tax planning and we wait until the New Year to book gains for tax planning purposes.
Our best advice is to be patient and throw bids in below the market. Buying dips and selling rips as swing trades remains the best strategy in these markets.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.