Raleigh, NC (PressExposure) June 15, 2012 -- According to the Associated Press, recent comments by the Federal Reserve Chairman Ben Benanke suggested the possibility of further economic stimulus. Known as quantitative easing, billions of dollars would be pumped into the economy, with the enhanced liquidity assisting banks, businesses, stocks, and American fiscal health overall.
The Associated Press also mentioned that stock markets traded higher immediately after Bernanke's comments, in anticipation of the possibility of further stimulus.
One analyst who expects clear skies ahead is Peter Leeds, the leading authority on penny stock investing, and the author of 'Invest in Penny Stocks.' [John Wiley & Sons] "There has been a lot of bad stock market news out there," states Leeds. "However, I think the majority of it has been factored in by investors. Traders are expecting a global recession, so they have 'baked it into the pie' so to speak, which is why you're seeing such compelling values in stocks and penny stocks, and the overall stock market."
"There is also the specter of our election year. Most politicians in power will want the economy and stocks to do well leading up to the election, and one way to make this happen is economic stimulus. I would be surprised if we don't see a big round of quantitative easing in the next few months, to temporarily goose the economy and stock market."
Leeds also cites the recent drop in China's interest rate, as reported by the BBC, as another positive factor for stock market performance this summer. One of the major global concerns until this point was a slowdown in Asia, but the freshly lowered interest rates in China may spur their economy strongly ahead, and thus help stocks and our stock market back here, according to Leeds.
"There is also a great deal of negative investor sentiment right now," adds Leeds. "Everyone seems to be preparing for the worst. However, it is important to remember that investor sentiment is a contrarian indicator - the worse the sentiment, the more likely we are near a bottom in stocks. If sentiment is highly positive, we are more likely to be in for a stock market correction."
For his research on penny stocks, large cap stocks, and the overall stock market, Leeds uses a lot of technical analysis (TA). He explains that one of these TA indicators is On Balance Volume (OBV), which is a measure of selling pressures versus buying pressures. Leeds explains that his current analysis shows OBV turning higher on the Dow Jones Industrial Average, which is generally a reliable method to predict higher prices in the short term.
"We are getting a lot of buy signals for the overall stock market, buy signals for the penny stocks we've reviewed in the past, and buy signals for the penny stocks we're researching right now. Whether fundamental analysis, which is 80% of our penny stock research, or technical analysis, many indicators are saying that penny stocks are highly undervalued right now, and that stocks and penny stocks alike are in for a great summer."