WGAT was submitted to me by a reader for review. Thank you for your submission!

I want to start off by saying that I don’t suggest investing in any stock with a share price under $5. I have adopted this strategy from IBD and while you can make a ton of money in penny stocks, the volatility is much higher and incredibly hard to control if you are an amateur investor. Also, the charts on low price stocks are very hard to analyze because they are usually very choppy.

That said, I am going to take it from the top of the chart to the bottom with my analysis. First, the RSI is indicating that this stock is hugely overbought. This doesn’t mean that the stock couldn’t keep moving higher, but that it has moved so much in the last couple of weeks that it is unhealthy to continue at such a high rate.

Next, I see a lot of supply coming into this stock. Yesterday and today both are off highs and volume yesterday was ultra-high. If WGAT is unable to finish near highs on high volume today, I would stay away from a long position.

Lastly, the MACD is trying to keep up as this stock blazed higher. Nothing special to take from this indicator.

Overall, I think that if you did invest in penny stocks, you would stay away from a long on this guy until you saw a pullback of some sort. It looks to me that if there was a pullback, it might be as large as 50% just because the stock is so volatile. If you do anything, try a protected short. Good luck and thank you!