Blog : My Morning Penny Stock Stimulus

by Ed Zwirn on May 17th, 2013

As I ingest my morning stimulus package--coffee and a cigar--and check my screen, a stimulus of an even more profound nature is playing itself out, with the stock market headed for its fourth consecutive weekly gain and all three of the penny stock picks I happen to have had on the screen from an earlier search gaining in price.

Okay, so maybe this isn't the most scientific of samples, but it is hard to find bad news out there, whether you're talking penny stocks or blue chips. The Dow Jones Industrial Average is as of this writing just above the 15,300 level, and of the most active stocks on my Yahoo Finance page, four are in positive territory so far this morning and only one down in price. The biggest of the winners on a percentage basis, a penny stock, is up 20%.

Nor is this bull sentiment being accompanied by widespread pessimism about the economy, a common feature of other "golden ages." According to the Thomson Reuters/University of Michigan report released this morning, the first half of May saw the consumer sentiment index rise to 83.7, much higher than the consensus forecast of 78 and a sharp spike from April's 76.4. I don't normally highlight this statistic, because I mistrust "soft" numbers like these, but this index is the highest level since July 2007, so I couldn't pass it up.

Clearly there is something going on here. The market, or for that matter an individual penny stock, is only worth what people think it is worth. Those of us who've followed penny stocks over the years have all seen the either frightening or exhilarating spectacle of an investment plummeting or soaring in short order based on changing investor perceptions.

The larger market is of course much harder to move than your individual penny stock. But, as you can see, it moves all the same. There may be good solid reasons behind all this latest euphoria, with real estate rising and the world's central banks pumping up the proverbial volume, but the fact remains that a great number of people are betting a great amount of money on stocks. Whether this is in-and-of-itself a contrarian indicator (as all contrarians would say) remains to be seen. On the other hand, this latest penny stock blog attempt to read trends could be woefully stale by the time you read it, much as the cigar I am smoking will undoubtedly be by that point in time.