Blog : Stocks Beat A Retreat

by Ed Zwirn on April 22nd, 2013

It was probably too good to last: The stock market beat a major retreat last week, with the Dow Jones Industrial Average closing at 14547.51 Friday, down more than 2% from the prior week's record 14,865.06 but still up more than 11% so far this year.

Of course, you could argue that the market for everything from penny stocks to blue chips was already getting ahead of itself and with the tragic attack on the Boston Marathon, followed by the unprecedented lockdown of an entire major U.S. metropolitan area, the market, as well as the public at large, was probably understandably distracted from hard economic news.

In any case, the economic news last week was mixed for penny stocks. Tuesday morning's announcement showed a 0.2% fall in the consumer price index occurring in March, following a February rise of 0.7%.

Recent news on the housing front has been mixed. On Tuesday morning, March housing starts were reported at 1,036,000, healthier than the expected 930,000 and well up from the prior month's 917,000. On the other hand, March building permits came in at 902,000, lower than both the expected 945,000 and February's 946,000.

So far this week, Monday morning's existing home sales announcement came in the way of a slight disappointment, with the figure for March pegged at 4.92 million, lower than the consensus 5.01 million and down from February's revised 4.95 million, but still 10.3% higher than March 2012.

Other economic news releases worth a penny stock investor's attention this week include the Tuesday morning new home sales announcement for March, which is expected to come in at 415,000, up slightly from the prior month's 411,000.

Wednesday is supposed to see March orders for durable goods fall 3.3%, following a February rise of 5.6%

In any case, with the market in a temporary holding pattern, there are both challenges and opportunities involved for your penny stock portfolio. It is difficult in the best of times to decide which stocks to buy and sell, and this is even more the case when the overall stock market is experiencing a bumpy ride. On the other hand, the market so far this year has continued to reward investors in hot penny stocks, despite last week's showing.

But, barring any really frightening headlines, and these could be economic or non-economic, the outlook for penny stock investors will continue to be a bright one, as inflationary expectations continue to damper, forcing the Fed to continue its easy money policies. On the other hand, given the bear's unhygienic practices, it may well prove safer to stay out of the woods, at least without the proper footgear.