The stock market is down today. This can be attributed to various reasons, including global economic conditions, interest rates, and company performance. However, there are also opportunities in times like these. The Dow Jones Industrial Average ETF (NYSE: DIA) has fallen by over 6.5% in the past few weeks! But all is not lost, and penny stocks can be a great way to make money when the stock market is down.
Today we’ll explore some of the reasons for this decline and how penny stocks can benefit from this trend!
Why The Stock Market Is Down Today
Not only today but the last week, the stock market has been in an apparent decline. One of the most significant contributing factors were Treasury yields rising and speculation on inflation and rate decisions later this year. This weighed heavily on tech and growth stocks and sent the Nasdaq into a freefall.
This was the first time the exchange ripped below the 200-day moving average since March of 2020. Other major indexes like the S&P ETF (NYSE: SPY) tested its 200-day moving average since and the Dow tested their 200-day moving average for the first time since June of 2020.
In the stock market today, other factors include weaker earnings and the 2022 outlook from companies including Netflix (NASDAQ: NFLX) and Peloton (NASDAQ: PTON), trigger sympathy selling in streaming, and stay-at-home stocks. This weighed heavily on an already bearish market.
Is This The Start Of Stock Market Crash 2022?
As a result, the conversation about a stock market crash and a correction have resurfaced. If this is somewhat of a new topic to you, a rule of thumb for stock market crash vs. stock market correction is a 10% drop from recent highs is considered correction territory, while a 20% drop is a crash or bear market territory. But this is the stock market, and even when certain stocks are down, others are climbing.
This is why penny stocks can be a great way to make money when the stock market is down. For example, if you invested in penny stocks like AMC Entertainment (NYSE: AMC) in January 2021 (around $2.20), your position is still up over 600%!
Yes, that takes into account the massive sell-off the stock has seen since last December. This is an a-typical return considering penny stocks are usually traded for 1 or 2 days. All the same, it’s a clear example of how you can make money by trading them even on a longer-term time horizon.
Are Penny Stocks Worth It?
Penny stocks can be worth it if you know what you’re doing. Many penny stocks are not worth investing in because they are overvalued or have no real business plan. But there are also several penny stocks that represent suitable investments.
When looking for a penny stock to buy, it’s important to do your research and have a trading plan in place first. There have been plenty of “bad companies” that end up becoming good trades in the short term. So knowing how to trade penny stocks in the first place is important. Then again, it also doesn’t hurt to look at company fundamentals like its financials to check its underlying potential. This is where traders might turn into investors following a deeper dive beyond technicals.
If you find a good penny stock that meets all these criteria, it can be a wise investment. However, always remember that penny stocks are risky, so never invest more than you can afford to lose. Right now, we look at a few top stocks to watch even with the stock market down today.
Penny Stocks To Watch #1. Hillstream Biopharma Inc. (NASDAQ: HILS)
Fresh IPO Hillstream Biopharma (NASDAQ: HILS) has been in recovery mode after selling off for the last week. The cancer treatment company raised $15 million in a public offering at $4 earlier this month and seemed to have started gaining interest among retail traders.
Its HSB-1216 and HSB-888 candidates are of particular focus as Hillstream has earmarked IPO funds for advancing these platforms. HSB-1218 is planned to progress through pre-clinical activities, complete Phase 1 studies, and manufacturing. Meanwhile, Hillstream expects to advance HSB-888 through pre-clinical activities with a hopeful Investigational New Drug (IND) application submission.
Not much more has been discussed publically thus far. However, insider buying from director Leonard Mazur has prompted some optimism recently. Mazur purchased more than 120,000 shares at average prices ranging from $3.20 to $4 this month. As the market dips lower, shares of HILS stock have remained in an uptrend over the last few sessions.
2. Hepsiburada (NASDAQ: HEPS)
Turkish eCommerce platform operator Hepsiburada (NASDAQ: HEPS) has slowly and steadily risen even with the stock market down today. Shares are now up more than 30% since January 10th as HEPS stock makes new 2-week highs on Friday.
This month, the company reached a deal with Intel (NASDAQ: INTC), which prompted the latest uptrend. The two companies will launch DigitalSME, a program supporting small and medium-sized businesses in Turkey. These businesses can develop their online retail infrastructure and contribute to digital economic growth in the country.
“Our DigitalSME program combines Hepsiburada’s and Intel’s experience with superior technology to propel the digital transformation of SMEs. The program will provide significant advantages for SMEs that are new to or want to move into e-commerce, enabling them to accelerate their growth by reaching a wider range of customers across the country and beyond.”
Murat Büyümez, Chief Commercial Officer
Even with the stock market down today, HEPS stock has climbed to test levels around its 2022 high.
3. Pintec Technology Holdings Ltd (NASDAQ: PT)
Pintec Technology (NASDAQ: PT) has also bucked the trend of the broader stock market today. Shares jumped more than 20% as certain financial stocks climbed. As far as specific PT stock news is concerned, there haven’t been many headlines to suggest directional momentum. One thing that we do know is that we’re heading into earnings season, and traders may be looking for a temperature on Pintec’s 2022 outlook.
In its last earnings update, the company said, “We continued to adjust insurance models, expand the strengths of our brands, deepen our partner channels, vigilantly manage risk profile while enhancing our asset quality…Specifically, we plan to utilize our proven ‘SaaS + Fintech’ model as a total solution in order to accelerate the digitization of SMEs, encompassing technology-based credit services and solutions to the manufacturing process and operations of these SMEs.”
Given the outlook on interest rates, lending and credit could become a focal point in 2022. This will be something to follow as Pintec works to expand its credit services for small and medium enterprises this year.
Penny Stock Trading Basics
Even with the stock market down today, there are plenty of ways to make money. Some penny stocks including those mentioned above, are going against today’s bearish trend and making new highs. Given the latest bout of volatility, if you’re trading penny stocks, learn the basics. Here are a few articles that could help:
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