Is penny stock DCGD about to crash? Or is the run just getting started?

penny stock speculative bubble chart

The penny stock DCGD (Discovery Gold Corp.) has been receiving a lot of hype. This is a stock that was at .0022 the beginning of this year and now it up to .65 a share. It came close to hitting $1 a share.

This is a shell company that has actively been looking for a merger and plans to enter the cannabis industry. They plan on changing their name to GRN Holding Corporation.

Investors are excited because DCGD recently added Peter Juvet, Jeff Sharkey, and Justin Costello to it’s advisory board.

According to OTCmarkets.com the company as of 07/05/2019 has 249,777,331 outstanding shares and 213 million that are restricted. Leaving 36,445,300 unrestricted as of July 5th 2019.

Many investors are excited about the new additions to the board but it may be a good idea to exercise caution. This isn’t the first time a penny stock has used executives that have past experience with larger companies to push up share price.

On June 20th 2019 Justin Costello and GRN Funds LLC, paid $300,000 USD for 139 million shares of DCGD. If we do the math that comes out to roughly .00215 a share. That huge discount is something to keep in mind if you are tempted to buy this stock for .60 a share or higher. Buying shares at the current price is paying over 270 times more than they were just bought for 2 months ago.

The truth is when it comes to low float penny stocks, they move on speculation and emotion. They attract unsophisticated investors and people that like taking risk. The seasoned investor would have most likely taken profit on DCGD at .06 but then they would have missed out on seeing it go above .90 a share. There is no way of knowing how high a stock will go.

Over the years I have noticed a few different patterns which make things a little more predicable.

One of my favorite patterns with speculative stocks that have been on huge runs, is what I call a speculative bubble chart. Ironically these usually have tops right around key psychological points. $1, .10 .01 ETC. Always seems like there is profit taking around those points. Below is a chart from last year of the stock POTN.

POTN has mass hype and hysteria surrounding it. After a huge run it stalled at the $1 range. It then came down and put in a double top. This top double was the first sign of weakness by the Bulls. This started a prolong sell off.

This pattern has shown itself time and time again on penny stocks. The tops are difficult to predict but if you watch for an 80% decline from its high you may be able to catch a swing trade on a bounce. This swing trade on the dead cat bounce is usually between 50-100%

Now this doesn’t mean that DCGD is on it’s way down to .20 (it definitely could be though). It just is something to keep an eye on based on several similar past stocks.

Here is the DCGD chart pattern below

At this point it is possible that it has already put in the double top with it’s quick intraday bounce. If that is the case we could see a decline and sell of to the .15-.20 level and a bounce from there to .25-.40. This of course is all speculation. Many bulls believe it will go to higher.

Will be interesting to see how things unfold over the next month or two. My entry will be in the .20 range if it comes down that low.

This is a chart pattern that you can make a lot of money off of if you spot it in time.

Disclaimer: Everything in the article is opinion based and should not be considered stock advise. I do not own any shares of DCGD and I do not have a short position.

If there is any more information you would like to add about this stock please comment. Comments with links will not be approved. Comments with profanity will not be approved.

About Travis Garlick 1531 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.

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