By Stevie Swai
One of our subscribers recently inquired about about pennystock DCTHD. Looks like it’s had quite a dreadful tumble in the last 20 days leaving it laying in the bargain basement bin. Could this be an opportunity of a lifetime? After all, the chart says it was trading at $1005 exactly a year ago. Our idyllic imaginations and calculations tell us that for $500 we could purchase 4347 shares and if it only reaches what is was trading at back on November 1, say around the 12.00 mark, that $500 investment would morph into a sweet $52,164. Well, no one likes a good deal other than yours truly and penny stocks have been the source of some of my best trades AND worst losses. So I’m all ears and eyes on this one. It’s definitely worth taking the time to look at it.
So before we get too excited and start counting eggs that may never hatch or worse even, turn completely rotten, let’s look at the big picture.
First of all, this stock was not trading at $1005 back in November; it did the same thing as the shippers with the splits – in reverse. So will this be another DCIX (or TOPS, RLOG, etc.)? The shippers had been clobbered into the recent lows, and had multitudes of reverse splits. DRYS bottomed first, we talked about that back in August. We traded DRYS back then, did a post here and here, about the trades. Trader Scott put out a post back on September 15 about the “long-term bottom in DRYS and the Baltic Dry Index”, and this was all discussed here. In that post Scott discusses his excellent trade in DCIX. It was just a daytrade, but in those few days DCIX was up 14X from the lows.
So is DCTHD in that same situation? The first step, as discussed in those posts, is to hold and to close above a big resistance area. The DCIX chart is below, with the first big resistance at $3.40, and then the rocket ship:
I remember DCTH(D) well, because back on June 23 it was trending quickly upwards and I jumped in and out of it for a 16% profit in 6 minutes which I wrote about. The chart tells us that it was trading between 56.00-79.00, but the truth is that it was trading back then for under .20 as my trade ticket shows me taking a position at .1350 and exiting at .1570. So the point is that this stock has already been trading very cheaply this past year.
It’s been one of the favorite stocks to trade among daytraders, especially back in the summer because it had some wild swings presenting great potential for profits. I’ll be honest and say that I know nothing about this company so I’ll just stick to the chart.
I started looking at this on November 22 and was actually considering taking a position when it was trading at .31. Too bad I didn’t because it topped out at .46 the next day. I was thinking it may have started trying for an uptrend, but wouldn’t be convinced until it hit and held .51. It did no such thing, and only continued to tumble to hit a low of .11. Is this the bottom? Who knows, but I’ll keep watching. It’ll have to break above .2897 and hold for me to get interested. I’ve gotten so burned by these little stocks before and as much profit potential that they hold, I think I’d rather play blackjack or poker.
I’ll sit this one out until it starts an uptrend and starts running, but you better believe that when it runs, I’ll be in…and out!
Thanks Stevie… I got some things from that.
Cool. Glad to hear it!
Hello Stevie. Got a charting question.
“to hold and to close above a big resistance area.”
As the volatility is taking place due the buying and selling; In real time what’s the minimum information needed to conclude that a stock “is hold and to close above a big resistance area”?(in other words, how soon can I know that something is holding)
You ask the best questions Raphael and I apologize for the delay in answering. Let me think on how I can explain this and I promise to get something written up before tomorrow morning. Thanks for your patience.
This business is about risk and probabilities – always. We learn the skills over time, and we develop experience (gut feel). So we never know for sure anything, but we put things in context (Scott discusses context all the time). So holding above an area, it needs to be put in context of everything else surrounding it. This will be expanded upon in an MP3 Q and A between Scott and myself very soon. We’ll keep everyone posted on when it will post and how you can listen.