Penny Stocks Are Trading Higher After Market-Wide Dip
We talk about the relation of penny stocks to broader markets. In general, even when there’s a large sell-off in blue-chips, cheaper stocks tend to move on their own accord. While this may be true 99% of the time, there are instances like today. Selling pressure has been in play for the better part of the last 5 days in the S&P and Nasdaq. Monday’s late afternoon slide was compounded on Tuesday morning.
Looking at major market ETFs like the SPY and QQQ, we see that both pulled back to critical technical levels. Both ETFs testing levels at or near their 50-day moving averages. Aggressive selling in things like tech added more fuel to the fire, which weighed down other related sectors.
Tuesday was one of the days we saw most stocks – including penny stocks – drop early in the morning. But as they say, when there’s blood in the streets, it could be time to buy. So far, as of mid-morning on February 23rd, stocks have rebounded strongly. Many have even regained levels higher than their opening prices on Tuesday.
Is it time to “BTFD“? I’ll leave that up to you. I can say that there are several hot penny stocks following this trend and could be on the watch list before March.
Hot Penny Stocks To Buy [or avoid]:
- SuperCom Ltd. (NASDAQ: SPCB)
- eMagin Corp. (NYSE: EMAN)
- Ideanomics Inc. (NASDAQ: IDEX)
- Savara Inc. (NASDAQ: SVRA)
Shares of SuperCom have been depressed during the same period as the tech sector. This dip seems to have come to a head, on Tuesday, with SPCB dropping back near its 50-day moving average. In mirroring the tech sector, shares ended up rebounding strongly from its lows of $1.41 and back above $1.50 by the late morning session. But what was keeping SPCB shares depressed outside of the broader industry?
That’s a tough question, mainly because no fundamental catalyst was apparent during the slide. There weren’t any headlines nor filings to pair with the dip. Needless to say, attention has refocused back on SPCB as traders seek out “dips” in the market. As for SuperCom’s main focus, it services the e-Government, IoT, and Cybersecurity sectors. Obviously, as the world becomes more digitally focused, companies like SuperCom could become a larger point of interest.
This year, SuperCom has taken a stance and looked at making 2021 a year for growth. With that, the company brought on a new CEO and recently buttoned up a $7 million financing this month. In response to the offering, President and CEO Arie Trabelsi explained, “Numerous wins in government tenders displacing our competition, proprietary technology introducing new abilities and superior performance, and a growing need of nations to utilize electronic monitoring and cybersecurity technology have positioned us with an opportunity to scale up and focus more on growth.”
Another tech stock to watch has been eMagin Corp. The company provides microdisplays used in different applications, including military and commercial AR & VR devices. Earlier this year, the company had received a Notice of Allowance from the US Patent & Trademark Office for the patent application titled “Microdisplay With Reduced Pixel Size And Method Of Forming Same.”
With this, the move that EMAN stock had experienced during the first 7 weeks of the year. Obviously, the latest drop saw some concern. But judging by the reaction from the rest of the market, this stutter-step may have been just that.
eMagin is another one of the companies focusing on growth this year. Toward the end of 2020, the company had expanded its New York manufacturing facility to support this initiative. “We are encouraged by the recognition we have received for our technology and are excited to begin the upgrade of our equipment and facilities. As a result, we are securing more space in our Hopewell Junction facility in advance of the arrival of the new equipment under our $5.5 million IBAS grant and $33.6 million award from the Department of Defense for enhanced U.S. domestic capability for high resolution, high brightness OLED microdisplays,” explained CEO Andrew Sculley.
The company is set to begin the buildout of the space this quarter. As a result, it increases eMagin’s existing cleanroom by roughly 50%. This will house a production tool for the company’s high brightness Direct Patterning Technology process. eMagin is also expected to hire additional production and engineering personnel this year.
Like eMagin, Ideanomics has also felt the same pressure that other tech stocks experienced over the last few weeks. Following 52-week highs of $5.53 during the first week of February, IDEX stock slid roughly 50% after hitting Tuesday’s lows of $2.71. Like many of the tech stocks today, IDEX bounced strongly. In this case, it was back above the $3.20 just before the lunch hour.
Tuesday’s momentum may not have been solely a result of broader industry momentum. Ideanomics announced that its portfolio company, Solectrac Inc. expanded its reservation campaign for Solectrac’s all-electric tractors.
“We’ve decided to decrease the initial deposit to allow customers to express their interest and intent. This is good for our customers and good for our production line,” said Solectrac CEO/Founder, Steve Heckeroth.
You may or may not be familiar with Ideanomics. The company has focused on a diversified approach addressing the growing EV market. Aside from Solectract, the company also has its Mobility division providing services facilitating the adoption of electric vehicles by commercial fleet operators. This is done by offering vehicle procurement, finance and leasing, and energy management solutions.
On a different side of the stock market today, we’ve got the biotech sector. Savara has been very quiet this year when it comes to headlines. It develops treatments for rare respiratory diseases. Toward the beginning of December, the company ended up stopping its development of AeroVanc.
This was the company’s lung infection drug targeting those living with cystic fibrosis. After missing the primary endpoint in a late-stage trial, the company shifted its focus on its Molgradex in autoimmune pulmonary alveolar proteinosis and a Phase 3 IMPALA 2 trial. The inhaled treatment is more recently coming into focus right now.
What is the reason why since there haven’t been any headlines? In that same December update, Savara announced that it would begin the IMPALA 2 trial at the beginning of Q2 this year. Considering we’re heading into the final month of the first quarter, the clock is starting to tick.