Top Small-Cap Stocks: Trading Opportunities For Next Week

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

A security pattern traces the distinct movements of security prices that, once recognized, helps traders to make informed trading decisions. These patterns are identified by their vital geometrical elements, which are formed by changing security prices. Let's look at some small-cap stock opportunities by analyzing these patterns.

Buy Signal for Salisbury Bancorp, Inc (SAL)

The bullish head-and-shoulders is the opposite image of a bearish head-and-shoulders pattern. It has all the same parts—two shoulders, a neckline, and the head. Only instead of the shoulders and head being formed at high points for the stock, they are formed at low points.

The investor psychology of the bullish pattern is the opposite of the bearish pattern. The stock appears to fall and hits a temporary low to form the left shoulder before a bounce occurs and forms the left side of the neck. The upward momentum is temporary, and the next down leg takes the stock lower than the left shoulder, and it then forms the head.

Investors jump in, thinking the new low is a buying opportunity. However, they then start taking profits after a decent run up to the neckline. The profit-taking creates the next down leg, but investors start buying on this third down leg before it gets down to the previous low. This forms the right shoulder and starts the next upward move.

Now, the momentum is to the upside and the buying pressure sends the stock above the neckline. At this point, the pattern is confirmed. After breaking above the neckline, the upward momentum is likely to continue, and the stock price keeps moving higher.

Trade Idea

  • Buy near the breakout (entry) price – $54,30.
  • Sell at the target (exit) price – $55,87.

Trend trading is a strategy based on the technical analysis of changing market prices. A trend trader often enters into a long position when a stock is trending upward, and uses the short position when a stock is trending downward.

Buy Signals for Grindrod Shipping Holdings (GRIN), Value Line Inc. (VALU), First Business Financial Services Inc. (FBIZ), and Northeast Bancorp (NBN)

Trade Idea

  • Buy at the opening of the stock market on Monday if the opening price has gone up by no more than 0.5% of Friday's closing price.
  • Sell after the price has risen by 2% from the closing price on Friday, or at the end of the trading week if the target is not reached.

Strong Buy Signal for Global Partners LP (GLP)

Trade Idea

  • Buy the stock at the current market price if it is seen as appealing.
  • Sell the stock after receiving the "Sell" recommendation from trusted analyses.
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