E Should You Have Penny Stocks On Your Watch List In April 2021?

TM editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence. 

Even with broader markets pulling back and cryptocurrencies taking a larger focus recently, higher-risk assets continue to captivate traders. I'm not going to go to the extent of a previous article and label them Reddit penny stocks, for instance. I think retail has expanded far beyond one independent social media platform. Obviously, Reddit has played its own role, but now that millions of new traders have been introduced to speculation and momentum trading, penny stocks, as a whole, have gained momentum. The problem that we see right now is that follow-through has been lacking.

I don't mean follow-through related to a stock breakout on a minute-by-minute basis but one that at the very least lasts a full day. If you've traded penny stocks during the last year, you'll remember a period where small-cap stocks were red hot. It wasn't just single-day breakouts but multi-day moves from hundreds of cheap stocks. Recently, however, it's becoming more of a stock picker's market. Is this a bad thing? Should you avoid all penny stocks if you can't day trade them? In short, no, but you should have a full understanding of what you're getting into when it comes to cheaper, more volatile assets. 

Something else helping build momentum behind these smaller names is the rise in things like Dogecoin and other digital assets. We saw NFT stocks captivate interest over the last few months. This saw plenty of speculation influences certain trends. Even if companies didn't have a formal update saying they were getting into NFTs, the exposure that some of them had to digital assets, including online art sales, did the trick.

Initially, Takung Art (TKAT) and Oriental Culture Holding Ltd (OCG) paved the way. Neither company initially reported an update related to NFTs. Still, as tech trends further emphasized the hype behind non-fungible tokens, retail traders took to these stocks hoping to be ahead of a potential move into space. Neither company has made much noise, and both former penny stocks are far off of their highs.

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