I have been noticing an uptick in volume and breakouts in OTC penny stocks lately.

For example, Active Health Foods (AHFD), which I had a great trade in this week, has already traded close to 7 billion shares this week and experienced fantastic momentum to the upside.

This tells me that volume and opportunity might consistently increase in OTC penny stocks in the short term.

Explosive moves, such as the one seen in AHFD, is what I look for because increased volume and volatility create opportunities.

One stock, in particular, that I have on my watchlist is PAO Group (PAOG)

According to Yahoo, PAO Group, Inc. focuses on alternative patient care treatments. The company, through its subsidiaries, engages in the development, sale, and distribution of premium medical cannabis products for the treatment of chronic and terminal patients. The company is headquartered in Sandusky, Ohio.

Key Stats per the otcmarkets.com:

Market Cap: 13.6M

Float: 620M

Outstanding Shares: 1.8B

Yesterday the stock broke out of a consolidation after the company announced positive news.

The company, per otcmarkets.com, announced that the market launch of its first CBD Nutraceutical is scheduled to take place on Monday, October 18th, 2021.

Why is the stock on my watchlist?

In May, the stock failed at the $0.0075 mark and then proceeded to trend lower up until the end of last month.

Last month the stock seemingly bottomed out after volume dramatically increased, and the stock made a higher low on the daily chart.

Yesterday, the stock surged higher, right back into significant resistance and where it failed from back in May.

I like this setup because if the stock can base higher, near the closing price yesterday, it might have its sights on the $0.01 mark, which acted as significant resistance in April.

Before breaking out yesterday, the stock spent three days consolidating between $0.0058 and $0.005. The former acted as resistance, and the latter support.

When the stock cleared resistance yesterday, volume increased, and the stock closed at the high of the day.

From now on, if the stock pulls back, I would not like to see it hold below the previous resistance of $0.0058.

To continue to have the stock on my watchlist and have confidence in the potential play, I would like to see the stock base over previous resistance. Then an opportunity might present itself for the stock to have another leg higher towards the next target area of $0.01.

Volume is another important factor that I will be keeping a close eye on. In the future, I would like to see the increase in volume continue and for the stock to continue to base over previous resistance levels. This might signal that the stock is remaining in play and that an outsized move might take place.

If the stock breaks below $0.0058 and then breaks below $0.005, I will no longer have confidence in the idea.

Jeff Williams

Jeff Williams is a full-time day trader with over 15 years experience. Thousands of entry-level and experienced traders alike – day-traders and swing-trade small cap stock traders – credit Jeff with guiding them to turning small accounts into big accounts.

Jeff’s "Small Account Challenge" shows people how to transform accounts from a few thousand dollars into $25k, $50k or even $100k.

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