Pacific Ethanol, Inc. Closes Up 26.13% by Market Close; PEIX

Pacific Ethanol, Inc., (PEIX) moved 26.13% today which may indicate a breakout to the upside. This stock is considered a penny stock by traders because it is priced at less than $5 a share. Penny stocks, like Pacific Ethanol, Inc., (PEIX) are interesting because price breakouts can turn into very large rallies on a percentage basis over the short term.

In many ways, traders treat penny stocks like a speculative position in a call option. They both represent limited risk and a high probability for a loss or merely short term volatility but when they breakout, the increase in price can be significant and very profitable.

Pacific Ethanol, Inc., (PEIX) competes in the Specialty Chemicals, industry with larger firms like Methanex Corp., (MEOH) and Sigma-Aldrich Corporation, (SIAL). We would normally expect Pacific Ethanol, Inc., (PEIX) to be much more volatile than its industry as a whole which makes a comparison to other firms in the group difficult.

If you are interested in trading penny stocks there are a few risks to keep in mind. 1. They are typically poor performers historically (which is reflected in the low share price).
2. They can be extremely volatile and losses are likely.
3. Because small stocks like Pacific Ethanol, Inc., (PEIX) are lightly traded they can be pushed around by a small number of traders.

source: learningmarkets