Unemployment Signals Penny Stock Gains
Peter Leeds asked:
Yes the economy has been doing very poorly. GM actually dropped into penny stock territory before going bankrupt, while other major corporations like Citi Bank traded well below the $5 per share cut-off for penny stocks, before disappearing themselves.
However, in recent months, and right on the heels of some of these brutal economic reports and occurrences, you may have noticed the stock market (especially the penny stock market) spring back to life. Pretty strong gains in what has been the most financially difficult time for our country in recent memory.
You wouldn’t know it, with 21 straight quarters of job losses and the highest unemployment rate since 1983, but penny stock investors could be in for a profitable ride.
You see, employment is a lagging indicator. That means it is a reflection of what the economy was like as much as 12 months ago. Meanwhile, the stock market is a leading indicator, which means that it foreshadows what you can expect in the future from the economy, sometimes as much as six to ten months ahead of time.
We’ve hit a tipping point with the stock market, which sees negative financial and economic news shrugged off, where that same information a few months ago would have sent people running for the exits. This is even more true with the penny stock markets.
At the same time, any good news is greeted with excitement, and buyers pile in to the shares. A few months ago good news would have been ignored by the fearful masses.
In other words, the majority of negative news has been factored in to the underlying investments, and we’ve reached a point of capitulation. There is not much more downside. There is a lot of upside. Investors are starting to see this now, and they are only just beginning to act upon it.
The result of this is smaller penny stock companies, which take less activity to move their shares, are benefiting with significant percentage increases in their prices. While a blue chip might gain 10 or 20 percent as the market recovers, some penny stocks are seeing their prices double, or more.
From a technical perspective, in the short term we’re seeing that many economic sectors are over-sold, meaning that there’s a lot of cash on the sidelines, and that there are a lot of tremendous values among stocks and penny stocks to be had.
We’re at the very beginning of a wave, where you’ll see buyers start moving back into equities, with a corresponding benefit to the prices of those shares. Investments will move out of the safe havens like gold and the American dollar, and flow back to where they started, the stock market.
This trend will last for many years, and will benefit blue chip stocks a lot, while having even more pronounced of an effect with penny stocks. This will be a great time to be a penny stock investor.
Therefore, when you hear doom and gloom comments from media and friends, just remember that they are talking about lagging indicators. Let them look backwards, while you make your money from penny stocks going forward.
Yes the economy has been doing very poorly. GM actually dropped into penny stock territory before going bankrupt, while other major corporations like Citi Bank traded well below the $5 per share cut-off for penny stocks, before disappearing themselves.
However, in recent months, and right on the heels of some of these brutal economic reports and occurrences, you may have noticed the stock market (especially the penny stock market) spring back to life. Pretty strong gains in what has been the most financially difficult time for our country in recent memory.
You wouldn’t know it, with 21 straight quarters of job losses and the highest unemployment rate since 1983, but penny stock investors could be in for a profitable ride.
You see, employment is a lagging indicator. That means it is a reflection of what the economy was like as much as 12 months ago. Meanwhile, the stock market is a leading indicator, which means that it foreshadows what you can expect in the future from the economy, sometimes as much as six to ten months ahead of time.
We’ve hit a tipping point with the stock market, which sees negative financial and economic news shrugged off, where that same information a few months ago would have sent people running for the exits. This is even more true with the penny stock markets.
At the same time, any good news is greeted with excitement, and buyers pile in to the shares. A few months ago good news would have been ignored by the fearful masses.
In other words, the majority of negative news has been factored in to the underlying investments, and we’ve reached a point of capitulation. There is not much more downside. There is a lot of upside. Investors are starting to see this now, and they are only just beginning to act upon it.
The result of this is smaller penny stock companies, which take less activity to move their shares, are benefiting with significant percentage increases in their prices. While a blue chip might gain 10 or 20 percent as the market recovers, some penny stocks are seeing their prices double, or more.
From a technical perspective, in the short term we’re seeing that many economic sectors are over-sold, meaning that there’s a lot of cash on the sidelines, and that there are a lot of tremendous values among stocks and penny stocks to be had.
We’re at the very beginning of a wave, where you’ll see buyers start moving back into equities, with a corresponding benefit to the prices of those shares. Investments will move out of the safe havens like gold and the American dollar, and flow back to where they started, the stock market.
This trend will last for many years, and will benefit blue chip stocks a lot, while having even more pronounced of an effect with penny stocks. This will be a great time to be a penny stock investor.
Therefore, when you hear doom and gloom comments from media and friends, just remember that they are talking about lagging indicators. Let them look backwards, while you make your money from penny stocks going forward.