Why The Bull Market Is Great For Penny Stocks

May 7, 2014   //   by Profitly   //   Market, Profitly  //  Comments Off on Why The Bull Market Is Great For Penny Stocks

A lot of people think that a bull market can hurt penny stocks. They’ll argue that the bull market will cause them to rise too far when Tim wants to short them or that people will look at more typical stocks rather that some of the crappy companies that are what we know as penny stocks. These may be true to an extent, but the pros far outweigh the cons. Let me explain.

The bull market that many say we are currently in brings up some common misconceptions about penny stocks and Tim’s and the other gurus’  strategies.  They don’t only short penny stocks, they find the best penny stocks to buy as well. Just check out how much money people are making through the posts we have on Profitly. Here is how much some of our gurus are up year-to-date:

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Tim is up more than $560k, Super Trades is up more than $630k and InvestorsLive is up more than $270k. That means they have all made more so far this year than most of the people reading this post will make all year. Still think the bull market is bad for our traders? Not at all. Bull markets make it easier than ever to find awesome penny stocks and the best penny stocks today. Most people just don’t understand how penny stocks work.

The gurus do short stocks, as you can see in our weekly roundups, but it should be pointed out that bull markets are great for finding blatant pump and dumps to short. In a bull market, promoters are more likely to find companies that want to take advantage of the larger number of people jumping in to stocks and looking for “great investment opportunities.” That means they are willing to pay the promoters more and the pumps will go higher than if it were a bear market. Then, the higher the stock goes, that more it has to fall and the more money there is to be made from shorting the stock. Investors will be looking for stocks that are marketed as undervalued and have strong growth potential. These are things that promoters often portray in their spam emails, generating a large pool of investors in a short amount of time. Once the promotion stops, there will no longer be a large group of new investors. The strength and hype will quickly disappear and the current investors will realize that the company is not nearly as great as the promoters were making it out to be. This creates a sort of panic, meaning investors will sell as soon as possible. Since there will be far more sellers than buyers, the stock will crash at a rapid pace. This presents more opportunities for you to learn how to trade penny stocks.

As Tim has noted on his blog before, he likes to short into strength. Bull markets create the most strength in some of the worst companies in the world. Another important thing to mention is that Tim and the other Profitly gurus like to buy earnings winners and breakouts. These types of trading plays are far easier to find in a bull market. Companies are more likely to have positive earnings surprises and breakout above key technical levels. Tim has done several videos for trading challenge students on how to spot and buy breakouts. These videos are even more beneficial in a bull market. He also wrote a blog post and did a video of how he made $4,000 in 2 minutes buying a breakout during the bull market.

Supertrades is another guru that has had some amazing trades in the bull market. He focuses a lot on finding momentum plays, and those are all over the place in a bull market.

So before you start thinking that you should wait until a stock market crash to learn how to trade all penny stocks from our gurus, think of the amazing opportunities you’ll be missing out on for penny stocks in 2014. There are new penny stocks to trade every day, and you are going to keep missing out on the next trade until you learn from the best.