It’s no secret that I like to buy into strength.

But did you know I also like to sell into it?

Wait, how can I buy into the same thing I’m selling into?

Sounds a little funny, I know.

But I can assure you it’s not only rational…

It’s a must, especially in this topping market I’ve been seeing in penny stocks lately.

KYN Capital Group Inc. (KYNC)

KYN Capital Group, Inc. (KYNC) operates as a holding company for acquisitions, entertainment, blockchain, cryptocurrency, and touchless payments.

It offers Koinfoldpay, a contactless crypto payment gateway for businesses. Its Koinfoldpay allows businesses to receive Bitcoin, Ethereum, Bitcoin cash, and Litecoin for online payments. 

Just another hype stock? I don’t know, but it’s been moving up since mid July after this announcement:

The stock was wedging in a consolidation pattern above the 200 day MA for a month before breaking out on a spike in volume July 21…and then continuing in an uptrend from there.

Coming into yesterday, the stock was trading at .019, and looked nearly tapped out sitting just below resistance at .021 (previous high on chart)…

But the very next day KYNC gapped up, trading right through the previous high like it was nothing and closing the day at .03 (chart below).

As you know, I like to buy strong stocks and this was a strong move.

I added it to my members’ midday watchlist…and the chase was on.

Although it’s a good start, it’s not enough to simply make a strong move.

I need to see some other pieces fall in line before taking a trade.

Take a look at the 5-minute intraday chart below.

KYNC gaps up on a big spike in volume, trends higher throughout the day…while staying above VWAP (pink line) the whole time.

The volume spikes each time it makes a new high…AND it closes near the high of the day.

In my opinion, KYNC was in a good position to carry that momentum into the next day.

I was eyeing a stop at the .025 area (below the VWAP), the only thing I needed now was a target to know if taking a trade was worth my risk.

I couldn’t find any recent previous highs other than .021, so I ended up looking at a weekly chart and something that caught my eye was the 200 weekly MA was sitting at just over .038.

I knew I could potentially see some resistance there, so I was eyeing a target in the .033 – .035 range and if the stock was looking really strong up to .038 potentially.

Why was my target .033 – .035 and not .038 or higher?

When a stock hits resistance, sellers step in to protect their position. This can lead to a lot of selling pressure which means a lot of orders competing with each other.

I don’t want to be one of the many traders trying to sell my shares at the same price. I want to get out just before the flood gates open…and that is why I sell into strength.

With that said, I was able to grab some shares at .0287 yesterday afternoon (for the reasons listed above) and hold them for the potential of continued momentum this morning.

The daily chart below provides a great visual to why I sell into strength and why I like to target areas just under resistance levels.

The stock opened up strong.

That same strength that I was buying into yesterday carried over into the market open today.

I was able to sell a portion in my target range at .0335 and as KYNC continued showing strength, I took my last shares out at .0361.

But look at the high of the day… the stock hit resistance and got turned around at .039.

This all happened in the first 5 minutes of the day.

What happens if I didn’t recognize the resistance level of .038 and plan to sell just under it into the strength? Or if I didn’t have a plan AND follow my plan?

Nothing good, that’s what.

Luckily for me, I did.

I can’t know for sure where a stock will end up, but by targeting resistance levels and selling into the strength…it helps me avoid the floodgates of selling when a stock hits certain levels.

I’ve been seeing this a lot lately in the penny stocks I trade. The moves aren’t following through for as long as they were a few months ago.

That’s why I’m keeping a close eye on my levels and selling into strength…instead of getting caught holding the bag.

And if the stock pulls back then makes another move, nothing is keeping me from making another trade on the next leg up. But until that happens, I’m safely on the sideline.