Buying Hot Penny Stocks That Have Sustained a 52-Week High

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An often used and successful strategy for attentive investors is to buy a penny stock that has sustained a high. Most penny stocks after reaching their 52-week high will experience a wave of selling. The wave of selling would no take place if investors believed that there was more to come and that soon the price would be even higher. Their expectancy could be based on a deal that is being worked on or on a contract that the company has just received.

A hot penny stock in this scenario will then establish a new base at the high as investors hold their stock and wait to see what happens next. If the company continues growing they will hold the stock and may very well add on to their positions. When the stock crosses over its 52-week high other investors will notice and buy the stock. They will buy the stock based on the rationale that if the stock was able to break through its 52-week ceiling the stock will continue going up and establish a new 52-week high. You can profit from this anticipation by buying penny stocks that have reached their high and maintained their price.

By buying penny stocks in this manner you have the potential of owning a stock that will be attracting interest from all the investors who expect it to establish a new 52-week high. The risk is that the selling might only be delayed and that it will start once the stock is one or two cents above its annual high. To minimize this risk, wait a few days before buying to see if it stabilizes. If the price starts declining after you buy it, it may be time to immediately sell and move on. Once the selling starts the stock could easily retreat to anywhere between its annual high or low.

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