Blog : Penny Stock Week: The Future Is Here!

by Ed Zwirn on November 18th, 2013

I remember going to the 1964-1965 New York World's fair as a kid, gaping at the glimpses offered at the exhibits of the technological marvels the future would bring. Today, many of these predictions seem quaint.

It is with that sentiment that I look back at a penny stock blog I wrote way back in September, in which I rashly predicted that 15K would prove to be the new floor for the Dow Jones Industrial Average.

Much as the actual technological achievements of the past five decades have overtaken many of World's Fair prognostications, today's stock market performance, which has seen the DJIA squeak pass the 16,000 level, has surpassed many expectations.

This follows a week which saw the Dow score its sixth consecutive winning week, setting more records and closing Friday at 15,961.70, up 1.3% from the prior week's 15,761.78.

The broader market outperformed the 30 DJIA blue chip stocks, with the NASDAQ Composite gaining 1.7% and the penny stock-rich Russell 2000 up 1.5%.

This surge occurred in the midst of a relatively sparse calendar of economic releases, with the only highlight being Friday morning's updates which showed industrial production declining 0.1% in October, following September's upwardly revised 0.7% rise, and a capacity utilization figure which slacked off, showing a 78.1% October increase, down from 78.3%.

While these figures are hardly the stuff that dreams are made of, the market for everything from penny stocks to blue chips was given plenty of good stuff to digest in the form of Janet Yellen's testimony at her Senate confirmation hearing on Thursday.

Yellen, who has been tapped to become the next chief of the U.S. Federal Reserve when Ben Bernanke's term as chairman ends in January, buoyed the market with her statements on monetary policy, which indicated a long life for the Fed's low short-term interest rate targets.

Looking ahead this week, Wednesday morning is expected to see a retail sales report showing a 0.1% increase in October, following September's 0.1% decline.

--On Thursday, the consensus is expecting to find out that consumer prices held absolutely flat in October, after rising 0.2% in September. And the "core" CPI, which excludes food and energy, is expected to spike by a whopping 0.2%, after rising 0.1% in September.

--Later that morning, October's existing home sales figure is expected to weigh in at 4.95 million, down from the prior month's 5.29 million.

--A further glimpse of the inflationary/deflationary front will come Thursday morning, with the release of a report which is actually expected to show a 0.2% fall in October producer prices, following a 0.1% decrease. The core figure in this case is expected to rise 0.1%, the same rate of increase reported for September.