As you might know, the markets can be cyclical.

The market can typically go through four stages of the economic cycle.

The four stages are expansion, peak, contraction, and trough. Below is an example from corporatefinanceinstitute.com.

When we are in an expansion phase, we are in a bull market. The peak can also be called the high or the top, and during this stage, euphoria and excitement will exist. The contraction phase is the correction. During this stage, the market will make lower lows and lower highs. This phase can also be called a bear market. The trough can also be referred to as the bottom. This stage marks the end of the declining wave and the transition to expansion.

It’s important to understand that a specific sector, industry, and type of stock can independently experience these stages. 

Lately, I have noticed something interesting, Gang.

I have begun to pick up on a change in the penny stock market trend.

Many stocks from summer to now have been in long downtrends. However, lately, I have been noticing more reversals. I also see a lot of higher highs and higher lows again and consolidations leading to breakouts.

It might just be a short-term increase in volume across penny stocks. 

It might be short positions covering or even a short-term increase in speculation. 

However, it might also be a significant reversal and shift in momentum in penny stocks that could increase opportunity and volatility.

Let me show you what I mean.


Exxe Group, Inc. (AXXA)

AXXA, according to Yahoo, focuses on real estate, sustainable technology, media, agribusiness, and financial services businesses. The company buys, develops, and manages real estate properties, including condominiums, hotels, vacation homes, residential complexes, senior living communities, offices, and self-storage facilities. 

The chart, volume, and indicators of AXXA are perfect examples of what I am noticing more regularly in penny stocks.


First of all, notice how the stock has been in a steady downtrend and recently made a new low, on December 6th. 

Also, notice how the stock has consistently been down-trending below the essential MA’s and steadily been trading light volume with no significant outlier days.

Resistance and staying power are what I like to see as well, and this chart perfectly shows that off too.

Last week, the stock touched the 200d MA and then pulled back and closed relatively weak. However, on Friday and Yesterday, the stock persevered gained momentum and volume, and broke the down-trend and resistance. The result was the stock closing up 87% yesterday.

The higher highs and higher lows, increased volume, sustained breakouts, and critical trends being broken are signs that penny stocks might be waking up.

As I have mentioned before, the markets work in phases and cycles. Sometimes opportunities are abundant, and the markets are hot, and other times it’s best to be patient and reasonably cautious. 

If the markets heat up and penny stocks begin making more significant moves, with increased volume and range, I will be ultra-focused and look to put my foot on the gas while the outlier opportunities are present.


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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