Blog : Penny Stock Week: After the Fireworks

by Ed Zwirn on July 8th, 2013

I told you to save a firecracker or two until after the release of the jobs report on July 5.

The stock market, opening the second trading week of Q3 in positive territory so far today, is in fact building on gains seen last week, with the Dow Jones Industrial Average up more than 0.5% so far today as the market for everything from penny stocks to blue chips returns back to work for a full workout following last week's shortened holiday action.

Monday morning's positive showing follows a week which saw the DJIA closing Friday at 15,135.14, up 1.5% over the prior week's 14,909.60 close, propelled northward by a Friday morning jobs report which showed a pickup in employment and drove the blue chip index up 147.47.

Last week saw penny stock investors treated to a release of strong economic indicators:

--Monday morning's construction spending report showed a 0.5% rise for May, following a downwardly revised April 0.1% increase.

--The scene stealer last week came on Friday, with the release of the June employment numbers. Nonfarm payrolls, which were expected to have risen 175,000, the same as May, actually rose 195,000. At the same time, May's reading was adjusted upward, to 195,000. The unemployment rate, as expected, held steady at 7.6%.

Economic releases worthy of a penny stock picker's attention this week include:

--Monday's consumer credit report is expected to show a $13.5 billion increase for May, up from April's adjusted $11.1 billion.

--On Friday, the producer price index release should be scrutinized by penny stock investors for any indication of an inflationary pickup. The consensus calls for Friday morning's release to show a slowdown in inflation, with the overall number rising 0.2% for June, down from May's 0.5% increase. The closely watched "core" figure, which excludes food and energy costs, is expected to show a 0.1% rise, continuing at the same pace as May.

Assuming the absence of other vacuum-filling news, it is this latest inflation reading that should prove to be this week's market mover as penny stock investors get back to business after Independence Day celebrations. The PPI is a more leading indicator than the CPI (since they have to make it before we can consume it) so penny stock investors looking to gage Federal Reserve intentions will have to hang their hat on it, at least until the release of the July 16 June CPI.