The Penny Stock To Swing Trade For 2012
The biggest problem with trading penny stocks is getting involved with a hyped up company which two weeks prior to the hype had Avg. Vol (10) of less than 20K. When 50 million shares start trading in a day, as was the case in December with Amwest Imaging, Inc. (OTCBB: AMWI) , late buyers get stuck holding stock at high prices with no option except to sell at huge losses.
Penny Stock Trading and Penny Stock Gambling are complete opposites. Generally speaking, trading penny stocks is all about swing trading the peaks and valleys of a stock that has the requirements to minimize your losses. A good example of this: Sirius XM Radio, Inc. (NASDAQ:SIRI) . Gambling penny stocks is jumping into a pink sheet stock that has rights to explore a .001 square mile area of a well-known area where resources have been extracted from before. A good example of this: Juhl Wind, Inc. (OTCBB: JUHL) .
The biggest issue with most penny stocks is how much you can manage to buy and sell at a profit. It’s a long road to becoming a millionaire trading penny stocks if you’re trading $1,000 at a time and capping your trades with a 10-15% profit. Yet when you find a penny stock that you can justify $20,000 and $50,000 trades in, you’re making serious cash then.
AMR Corp. (NYSE: AMR) closing price in the stock market to end 2011 was $0.35. AMR traded 81,735,044 shares which is almost 3x its Avg Vol (3m). AMR is trading -63.76% below its 50 day moving average and -88.67% below its 200 day moving average. AMR is -96.06% below its 52-week high and 75.00% above its 52-week low. AMR‘s EPS (ttm) is -2.93 and its market cap is $117.33M .
NYSE regulators said it will delist the common stock of AMR Corp. before the opening bell on Jan. 5., saying that it is “no longer suitable” for listing. On November 29th, AMR, the parent company of American Airlines, announced they were seeking bankruptcy protection. NYSE Regulation cites that reasons, including the timing and outcome of November’s bankruptcy filing, as well as AMR’s weakened share price. AMR’s average closing price has been below $1 over 30-consecutive days and AMR has informed the NYSE that it would not be possible to verify its intent to remedy this deficiency within the exchange’s prescribed timeframes.
Reorganization under Chapter 11 of the U.S. Bankruptcy Code is a form of bankruptcy. It isn’t “liquidation”, but it’s not a joke, either — it’s the last legal step before liquidation. If they weren’t in danger of going out of business, they wouldn’t be in bankruptcy. In order to petition the bankruptcy court for protection from its creditors and reorganization under Chapter 11 of the Bankruptcy Code, a company must first certify to the court that it is insolvent: its debts exceed its assets. A bankruptcy filing protects the bankrupt company against its creditors (including people who have paid for tickets for future travel). It doesn’t “protect” passengers or customers.
Basically, we’re looking here at a company that has an incredible amount of daily volume and a worldwide presence in the airline industry. American Airlines filed for bankruptcy deliberately. AMR had $4 billion in the bank. Even though AMR had been losing money for a while (like almost every other service based company in the world), AMR could have kept paying its bills. The swing trade play of 2012 was created since the AMR board of directors decided that it was foolish to keep throwing good money after bad.
Don’t get scared off by the amazing opportunity made by this filing. By declaring bankruptcy, AMR will trim its debt and allow it to break its union contracts so that it can cut costs. Wall Street analysts praised AMR’s move as “very smart.” It’s the 21st century way which is now generally accepted. If it’s economically irrational for a company to continue paying its debts, renegotiate them or default.
Add AMR to your hot penny stock watch list and watch for their new designation and ticker symbol when they are delisted January 5 from the NYSE.
About AMR Corp. :
AMR Corporation operates in the airline industry. The company, through its principal subsidiary, American Airlines, Inc., provides scheduled jet service to approximately 160 destinations throughout North America, the Caribbean, Latin America, Europe, and Asia. American Airlines, Inc. also operates as a scheduled air freight carrier, providing a range of freight and mail services to shippers. AMR Corporation, through its other subsidiary, AMR Eagle Holding Corporation, owns and operates two regional airlines with approximately 1,500 daily departures, offering scheduled passenger service to approximately 175 destinations in North America, Mexico, and the Caribbean. The company also serves approximately 250 cities in 50 countries with 3,400 daily flights. It has a combined network fleet of approximately 900 aircrafts. The company was founded in 1934 and is headquartered in Fort Worth, Texas. On November 29, 2011, AMR Corporation, along with its affiliates, filed a voluntary petition for reorganization under Chapter 11 in the US Bankruptcy Court for the Southern District of New York.
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