There’s no investor out there that could say it’s been a bad year to be long penny stocks. In fact, a number of analysts continue to be stammered at how well all stocks are holding up given the positive but merely average economic data being release.
Certainly the data is slow and steadily improving, but many experts feel that the key ingredient that’s missing is real employment gains. The sentiment is the statistical improvements reported in each release are lacking substantial jobs, meaningful income, and is made up mostly of part-time and/or low wage jobs.
But even in the face of this fundamental dilemma, stocks have continued to rise…
As of December 1, the S&P 500 has gained 29.12% so far this year. Even more impressive is the small cap sector index S&P tracks using the S&P 600 Small Cap (SML).
Small caps, when using this index as a tracking tool, have been even better than the S&P 500 with a year-to-date return of 39.3%! Take a look at the chart below to see for yourself (the green line is the S&P 600)…
Pretty impressive, but from my experience, not at all unexpected. You see, most times, small cap and penny stocks lead a rally higher, as they are more volatile.
So, now that we’re looking to wrap up 2013, can investors count on a Santa rally to take us to even bigger gains in penny stocks?
Most times, I’d say we could be in for some prudent profit taking after a year of gains like we’ve seen in 2013. Conservative and experienced investors might think it wise to take some of their gains off the table. But given the lack of negative data in the financial world, I’m going to say we see gains continue right into the end of the year.
That is, of course if we don’t see some horrible world event or bottoming of any data points.
The bottom line…
There’s nothing indicating the trend of penny stocks and small caps outpacing the broad market will unexpectedly end. And that means you can hang tight for a little while longer.
Keeping you one step ahead,