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

This past "Recovery Day" was anything but - stocks took an absolute pounding on Friday as news broke of a new "omicron" coronavirus variant loose in the world. The Dow dropped more than 900 points, and the big S&P 500 index lost more than 2.3% at one point.

The energy sector was even worse. The Energy Select SPDR Fund (NYSEArca: XLE) tanked more than 6% on Friday. Investors were clearly imagining omicron would torpedo demand for oil and gas, just like the "O.G." coronavirus did back in March and April 2020.

I think that's a tad dramatic. First of all, we don't really know much about omicron yet. We know it's got some potentially scary mutations, but that's about it. Over the next few weeks, scientific consensus will emerge, but the business case for an overall bullish market is still strong.

Image Source: Pixabay

See, sell-offs like we saw this past Friday are kind of like a feather blowing around in a tornado. Volume was very light - as it always is the day after Thanksgiving - and the trading day was short. The overall economy was no different on Friday than it was on Wednesday. Markets just don't bottom on Fridays, and all the ingredients were there for the bullish trend to resume.

And as if on cue, a fast, convincing rally ignited yesterday morning; by 10:30 a.m. or so, the S&P 500 had already made back half of what it lost on Friday.

Energy is leading the way - the sector should erase those 6% losses over the next day or two. I've charted an energy penny stock that could do as much as 10 times better than that...

The Chart on This $3 Company Looks Great

Today, I'm looking at Baytex Energy Corp. (OTC: BTEGF). This oil and gas company is based in Calgary, near the epicenter of the Canadian oil industry. In fact, Baytex works in the rich Western Canadian Sedimentary Basin and East Texas' Eagle Ford Shale.

Now, I'm on the record as saying green energy is the wave of the future - and it is - but the truth is, current economic conditions favor high oil and gas prices, so it makes sense to be in oil and gas stock right now. Baytex is simply the best (and cheapest) ways to do that right now. It's not necessarily a stock you want to hang on to for years. Own it until it hits my profit target.

Today, BTEGF is trading just above $3. It took a big hit this past Friday, like just about every other stock. Normally, that might upend the technical picture, but the stock is snapping back nicely and still right in my "buy" zone. In fact, the price looks even better today than it did last week.

There's strong support still from its bullish 50-day moving average (MA 50) - the stock is hanging out within a few pennies of that level right now.

When I look at that important "Trader's Trendline," I see some serious potential there. It's extremely bullish, and, just as important, I see the average volume index is on the rise, which tells me the stock is "in play" as it approaches that MA20.

Monday's movement has been very bullish, with the stock up more than 2% at midday. A breakout here will trigger a buying frenzy - a "bullish volatility event" as the stock moves up above its tightened top Bollinger band.

So, here's what to do: Buy BTEGF shares up to $3.30. Put a 10% trailing stop in place to protect your principal and your profits. I'm targeting a move up to $5 in the short term - that would take the stock out of "classic" penny stock territory and would represent about 65% in gains from Monday's opening price. When the stock hits $5, tighten up your stop - make it 5%.