5 Penny Stocks Under $3 With Unusual Volume This Week: Educational Analysis

Penny stocks are moving hard this week, and volume tells the story. When a sub-$3 stock prints 7-8x average daily volume, retail traders take notice. But before you even think about charting entry points, understand this: penny stocks are not for capital you can't afford to lose. They're illiquid, prone to manipulation, and lack the fundamental underpinnings that support larger equities. That said, from an educational perspective, let's break down five tickers that are generating unusual activity and what the technical setup tells us.

MULN — Mullen Automotive ($1.82)

Why It's Moving: Mullen Automotive surged 34% this week on 89M shares traded versus its 12M average daily volume—a 7.4x volume spike. The catalyst: a new EV partnership announcement. In penny stock land, partnership news (even vague partnerships) often triggers immediate short-covering and retail FOMO. With a float likely under 500M shares and news-driven momentum, this stock has the hallmarks of a squeeze candidate.

Technical Setup: This is a classic "morning panic into FOMO rip" pattern. After an initial spike on the partnership news, expect a first retest of support around $1.65–$1.72 (yesterday's open). If the stock holds there on reduced volume—what traders call a "dip and rip"—that's a potential zone where aggressive traders *might* consider watching for continuation. Resistance sits at $2.10 (intraday high before consolidation). An ABCD pattern could develop if the stock pulls back 20-30% from its spike high and then resumes uptrend.

Risk Factors: Float size on MULN is substantial (400M+), which limits true squeeze potential. Short interest data is volatile and often delayed for penny stocks. Dilution risk is high—EV companies burn cash, and capital raises at lower prices are common. The "partnership" may lack material substance; vague press releases are often used to pump stock price temporarily.

Key Levels (Educational Only): Watch $1.65 as a first support test. If that breaks on volume, $1.50 becomes the next support. Resistance overhead at $2.10–$2.25. Traders who enter here without a pre-planned stop loss at $1.50 or lower are gambling, not trading.

BBIG — Vinco Ventures ($2.41)

Why It's Moving: BBIG is up 22% this week on 45M volume (versus ~8M average). The kicker: short interest is 31% of float, and when a heavily-shorted penny stock gets bullish volume, shorts panic-cover. This is *the* short squeeze archetype. Penny stocks with 25%+ short interest are attention magnets for retail squeeze traders.

Technical Setup: BBIG is setting up what traders call a "squeeze trigger" — high short interest + rising volume + positive price action. The stock consolidated around $2.15–$2.30 for three days before this week's breakout. If it closes above $2.50 on solid volume, the next resistance zone is $2.80–$3.00. Below that is the old resistance at $2.00. A break above $3.00 would signal a true squeeze unfolding, potentially targeting $3.50–$4.00 on pure short-covering.

Risk Factors: Short squeezes are binary events—they either run or they implode. If shorts covered aggressively this week, fuel is burned and the move could reverse hard. BBIG has a history of dilution and failed business pivots. Penny stocks with extreme short interest are often shorted for a reason. Liquidity evaporates on down days, trapping retail traders.

Key Levels (Educational Only): $2.50 is the breakout level. Support at $2.15–$2.20. If shorts cover aggressively, a wick above $2.80–$3.00 could precede a violent pullback. A failed squeeze looks like a spike to $3.00 followed by a close below $2.40. Stop-loss consideration: $2.05.

SNDL — Sundial Growers ($2.15)

Why It's Moving: SNDL jumped 15% this week on cannabis rescheduling news—the DEA signaled a potential downgrade of cannabis classification. This is a macro catalyst that affects the entire sector. Volume spiked to levels well above SNDL's average, suggesting both retail FOMO and institutional repositioning into cannabis plays ahead of potential rule changes.

Technical Setup: SNDL is breaking above its 50-day moving average (roughly $2.05). The stock formed a "cup and handle" pattern over the past two months—a measured-move target would suggest $2.60–$2.80 if the handle completes and breaks upward. Volume on the breakout is solid (30M+), which is bullish for continuation. This is less of a penny stock squeeze and more of a sector rotation trade.

Risk Factors: Cannabis stocks are highly policy-dependent. Rescheduling news can reverse rapidly on political developments. SNDL has weak fundamentals—it's not yet profitable and carries debt. The cannabis sector is crowded; larger players (TLRY, SNDL's competitors) will benefit more from rescheduling than a micro-cap. Regulatory uncertainty remains extreme.

Key Levels (Educational Only): Breakout zone $2.10–$2.20. First resistance $2.45. Key support on pullback: $1.95–$2.00. If rescheduling news fades, expect a retest of $1.85.

CLOV — Clover Health ($1.93)

Why It's Moving: CLOV surged 18% this week on Medicare expansion news—specifically, optimism around expanded telehealth coverage and insurance penetration. Healthcare/insurance stocks often have catalyst-driven moves tied to policy shifts. CLOV also has a cult retail following from the 2021 meme era, so news can trigger secondary waves of retail attention.

Technical Setup: CLOV is still in a longer-term downtrend (down 60%+ from IPO levels), but this week's move is off significant support around $1.80–$1.85. If it holds above $2.00 for three consecutive closes, a short-term uptrend would trigger. First resistance is $2.20–$2.30. The move lacks conviction volume compared to MULN or BBIG; this is more of a shallow bounce than a true reversal.

Risk Factors: CLOV's fundamental story is challenged—it's not yet consistently profitable, and healthcare policy is unpredictable. The Medicare expansion news may already be priced in. The stock has a history of failed rallies: 2021 saw a $30 spike that collapsed to $5. Don't assume retail enthusiasm persists. Liquidity is moderate; a 15M-share sell order could crater the price quickly.

Key Levels (Educational Only): Support $1.75–$1.80. Resistance $2.20–$2.40. Break below $1.75 would suggest the bounce failed. Entry consideration only if the stock holds $2.00 on the close; otherwise wait for better setup.

WISH — ContextLogic ($0.89)

Why It's Moving: WISH rallied 28% this week on restructuring plan announcements—management signaled cost cuts and operational efficiency improvements. Any hint of business turnaround sparks speculation in penny stocks, especially when the stock has fallen 95% from all-time highs. At $0.89, it's now trading at bankruptcy-level valuations, which attracts value hunters and short-squeeze traders alike.

Technical Setup: WISH formed a double bottom around $0.75–$0.78 over the past month. This week's breakout above $0.85 on volume suggests a "dip and rip" into a potential run toward $1.10–$1.20. If the stock closes above $1.00 on heavy volume, a measured move would target $1.35–$1.50. However, this chart has failed multiple times before—each restructuring attempt has fizzled.

Risk Factors: WISH is in a death spiral. Revenue is declining, losses are accelerating, and restructuring plans rarely save penny stocks in secular decline. This is a pure speculation play, not an investment. Float is massive (400M+), limiting upside. Dilution is probable if the company seeks capital. A negative earnings report could crater the stock to $0.50.

Key Levels (Educational Only): Breakout level $0.85–$0.90. First resistance $1.00–$1.10. Support $0.75. Stop loss: $0.70 if you're trading this, period.

How to Trade Penny Stocks Safely (Educational Framework)

Position Sizing Rule: Penny stocks should represent no more than 2-5% of a trading account, and only capital you're comfortable losing entirely. If a penny stock move (up or down) would emotionally devastate you, the position is too large.

Stop Loss Is Non-Negotiable: Every single trade needs a pre-planned stop loss before entry. For penny stocks, this often means 5-10% below your entry (not 20-30% like large-cap trades). The whipsaw speed in penny stocks means hesitation = ruin.

Never Chase: The best penny stock trades have 3-5 day setups, not intraday chases. Wait for consolidation, wait for support re-test, wait for volume contraction. The move that looks "too late to chase" is often the safest entry because the initial panic is over.

Volume Confirmation: Without volume, penny stock moves are suspect. 40M+ shares traded on a 2-3M average daily is legitimate. 5M shares on a 2M average is a dead cat bounce.

Frequently Asked Questions

Are penny stocks suitable for beginners?

No. Penny stocks lack liquidity, transparency, and regulatory oversight compared to larger equities. Beginners should master fundamentals and technical analysis on liquid stocks ($10+) before attempting penny stock trading. Losing 100% of a penny stock position is common.

What's the difference between a short squeeze and a pump-and-dump?

A short squeeze is a genuine move driven by forced short-covering as price rises. A pump-and-dump is coordinated manipulation where insiders or promoters hype a stock, dump shares at the peak, and leave retail holding losses. Both look identical on a chart; the truth emerges afterward.

How do I know if a catalyst is real?

Read the actual press release, not Twitter commentary. Real catalysts move stock price sustainably; hype-driven catalysts spike then fade within hours. Partnerships, acquisitions, and regulatory approvals from credible sources are real. Vague operational announcements are often fluff.

Should I hold penny stocks overnight?

High-risk traders sometimes do; conservative traders don't. Penny stocks gap on open frequently, and overnight news can destroy a position. If you're not comfortable seeing -20% on open, close the position before market close.

What's the relationship between float size and upside potential?

Small float (under 50M) amplifies volatility and squeeze potential. Large float (300M+) means moves are typically slower and more diluted. Stocks under $3 with float under 100M have the highest volatility but also highest risk.

Final Warning: The Penny Stock Reality

This article is educational analysis only. None of the stocks mentioned are recommended for purchase. Penny stocks are speculative instruments where losses exceed gains for most retail traders. The five stocks covered this week will likely be different prices—or halted—by next week. Catalysts fade, short squeezes reverse, and restructuring plans fail. Trade at your own risk, size down, and never invest money you need.