Blog : Penny Stock Week: From Caloric Consumption to Data Digestion

by Ed Zwirn on December 1st, 2013

The market's extended weekend comes to an end with a vengeance this week, as caloric consumption morphs into digestion of a heavy array of data, including everything from snapshots of Black Friday retail spending to November's jobs report.

This follows a bullish abbreviated trading week which saw prices rise for stocks of all sizes, with the broader market, including penny stocks, outperforming blue chips. The Dow Jones Industrial Average closed Friday at 16,086.41, up 0.1% from the prior week's 16,064.77, just barely scoring its eighth consecutive winning week. Penny stocks and mid-sized companies outperformed the big boys, with the NASDAQ Composite gaining 1.7% and the small-cap Russell 2000 up 1.6%.

Last week's economic releases were generally upbeat:

--There was good news on the housing front Tuesday morning, with building permits weighing in at a better-than-expected 974,000 for September, a pickup from August's 891,000. October building permits also showed an impressive increase, totaling 1.034 million. This was followed later that morning by the Case-Shiller 20-city index update, which showed a better-than-expected 13.3% rise for September, up from August's 12.8% increase.

--On Wednesday, the market had been expecting to see a 2.2% fall for October durable goods orders, but in fact received slightly less bad news, with the indicator falling 2% in October, reversing the upwardly revised 4.1% gain seen in September. Excluding transportation, the indicator performed worse than expected, losing 0.1%, following September's upwardly adjusted figure, which showed a 0.2% rise.

Looking ahead this week:

--Monday morning's construction spending report is expected to show a 0.4% rise for September, following August's 0.6% increase. Construction spending for October is expected to show a 0.3% rise.

--Tuesday afternoon will see the release of auto and truck sales figures for November, which will be scanned for any difference from the 5.4 million auto figure and 6.5 million truck sales seen in October.

--On Wednesday morning, investors are expecting to hear news of a 432,000 new home sales figure for September, a pickup from August's 421,000. New home sales are expected to total 420,000 for October.

--On Thursday morning, investors will get a revised snapshot of the overall U.S. economy. The government's Q3 gross domestic product figure is expected to be upwardly tweaked to show a 3% rise, up from both the 2.8% initial estimate (itself the best gain since Q3 2012) and the 2.5% increase seen in Q2.

--Later that morning, factory orders are expected to show a 1% fall in October, following September's 1.7% rise.

--Friday's non-farm payroll report will be the first jobs report unaffected by the confusion generated by October's government shutdown. The market is expected to hear that 188,000 new jobs were created in November, following October's 204,000. Backing out the cutback-ridden government payroll, the private sector is expected to have added 200,000 jobs in November, down from 212,000.