Small Cap Stock Market Investing Tips

A significant portion of the market worry for the week was resolved when European fiscal leaders were finally able to hash together a deal that would open the doors to Greece receiving another round of bailout cash, but that wasn't enough to satisfy US investors as the markets dropped amid increasing concerns of a political impasse surrounding the fiscal cliff.  Rhetoric was rosy immediately following US elections earlier this month that Republicans and Democrats would be able to come to the table and reach a compromise on the pending tax hikes and spending cuts that would result from enactment of the cliff, but each side looks again to have dug in its heels leading many investors to doubt that an outcome could be reached before the new year. 

As previously discussed, it's more likely that politicians will be able to reach an agreement on extending the deadline for reaching a new deal, which would temporarily ward off the tax hikes and spending cuts that investors and political pundits alike believe would lead to another US recession, but do little to quell the uneasy nerves of investors who grow continuously impatient with Washington's inaction.  That means nothing has changed for us on a day to day basis - we can still expect a volatile market as negotiations continue and it's likely that a few trading/accumulation opportunities may arise through the volatility.

There's a few opportunities that have already played out, and there are still more to keep an eye on moving forward.  Here's just a few of them...

At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.

After a week of celebrating family, friends, turkeys and stuffing, there'll be plenty to keep us occupied on the markets during the coming trading week.

A festive holiday mood, a cease fire in the Middle East and the perception of bipartisanship in Washington sent the markets well into the green last week, allowing for the DOW to reclaim the 13,000 throne for the first time since election day.  The S&P and Nasdaq followed suit, too, as did many of the international markets, creating a level of enthusiasm leading into the new trading week.  In all actuality, investors should not entirely expect the run to continue.  Many key concerns - many of which have resulted in the market decline of the past few weeks - still exist, most notably the pending 'fiscal cliff' in the United States and the inability of European leaders to finalize a plan for the next round of bailout money for Greece... 

How quickly the tide can change.  Barely a day after the markets rose in force on encouraging signs of cooperation in Washington and in the European Union regarding the 'fiscal cliff' and Greek bailout, respectively, the mood changed by Wednesday morning and investors are again skittish - at least according to some headlines - because of reinvigorated concerns over the same subject matter.  While there are no indications that talks in the US over the fiscal cliff have been derailed, there may be something to the European concerns as ministers over there failed to come up with a united plan on Tuesday to continue the flow of bailout cash to Greece in order to keep that country from going bankruptcy.  If you want to talk about cliffs, Greece is teetering on the economic edge of one now, sparking fear among investors and economists alike as the euro hit multi-month lows Tuesday... 

At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well.

An up day on Friday wasn't quite enough to eliminate another overall down week for the markets as flare-ups in the Middle East and concerns over the pending fiscal cliff in the United States continued to play on the minds of investors, but an unusually cooperative tone in Washington over the past few days could ease worries of a protracted market dip as the cliff negotiations play out.  Some may take a "wait and see" approach, however, because it's truly been years since the words "cooperative" and "Washington" could be associated in the same sentence - and just because Republicans and Democrats are talking, it doesn't mean that a deal is going to get done before the 11th hour.  After all, American politics are so divided and polarized right now that neither side wants to be viewed as cohorting with the enemy, and too much cooperation may kill the cable news channel ratings, so there's likely much more drama to come regarding these negotiations - whether invented by the media types or not - meaning there should still be plenty of market volatility until the day a deal is announced...

Stocks continued their recent slide on Wednesday as negotiations over the pending 'fiscal cliff' in the United States took center stage when US President Barack Obama indicated that he would be unwilling to waver when it came to imposing tax increases on the wealthiest Americans.  Republicans in the House have also indicated that their position of no tax hikes without significant budget cuts is also unwavering, setting the tone for what could be a very tense and politically bloody period of discussions.

Tensions also flared in various flash points around the globe, which only added to the bearish investor mood and sparked a sell-off that intensified as the trading day progressed.  Europe has been riddled with mass protests and strikes by citizens unhappy with the drastic measures of austerity having to be implemented due to sputtering economies over there and new violence in the Middle East also has investors nervous...

Investor caution could dominate mid-week trading as debates over the pending 'fiscal cliff' in the United States intensify as European leaders across the Atlantic decide to pay for another round of bailout financing to ward off a Greek bankruptcy.  The Greek government ignored the molotov cocktails and angry protesters last week to come up with additional measures of austerity - the first step towards securing this additional round of bailout money - and European fiscal representatives granted the country another two years to get its fiscal act together, but concerns of how these bailouts will be paid for transparent to European taxpayers will still weigh heavily on the markets. 

European shares suffered as a result on Tuesday, as did the Euro, which hit multi-month lows.

Any talk of European or international fiscal entities leaving the Greeks to fend for themselves is slim at this point, so the markets may take any concerns of a return to the drachma with a grain of salt, given that the bailout money has already started to flow into the country and it doesn't look like the tap is going to be shut off.  That said, if the rest of Europe gets tired of bearing the brunt of Greece's woes and uncertainty again creeps into the markets, all bets may be off...

"Readers Respond" is a forum where readers run the show by commenting on or adding to ongoing discussions regarding events or companies that have either been covered by VFC's Stock House or are worth bringing to the attention of readers.  Remember, you don't have to agree with VFC to contribute - the best discussions are the ones where all angles are covered. All comments are welcome via email: vfc@vfcsstockhouse.com, Twitter (@VFCsStockHouse), Facebook or the VFC's Stock House Seeking Alpha page.

A comment from Seeking Alpha reader 'tpim' in response to the November 5th 'Weekly Stock Watch', which included discussions of Implant Sciences (IMSC): 

I see you are long imsc.pk. What do you think of Ben Sharvy's article? ...

At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well. 

With the election season now behind us and the prospects of a 'fiscal cliff' facing the US economy, concentration this week will be focused on whether or not last week's broad market drop will continue into an all-out market correction, as some have predicted.  The markets started tanking on Wednesday -following the re-election of US President Barack Obama - but to be completely fair to the President, the pullback cannot solely be attributed to investor reaction to the election results - there were many other factors at play last week that likely led to the market drop...

Shares of Organovo Holdings (ONVO) have traded all over the map during the month of October, surging from just below the two dollar mark to well over three on strong volume when the company and its sector received high-profile coverage from reputable media outlets at the mid-month mark.  The volatility has subsided, however, and shares have simmered down again as the day, swing and momentum traders moved on with profits following the run.  Remaining investors - and potential new ones - will be investigating for themselves whether or not Organovo has what it takes to become a winner again, whether it be over the the speculative short or the validated long term.  The key - as is usually the case with still-developmental companies - lies with the technology, and it's the technology that may have this company riding the wave of the future in medical research and development...

At the conclusion of each week, VFC's Stock House examines some news items, stocks and stories that made headlines during the previous trading week, but may also make headlines or influence trends during the upcoming week as well. First thoughts again go to those who are still pulling themselves or their loved ones together after the wrath of Hurricane Sandy.

Finally...the politics may be winding down. Undoubtedly, Tuesday's US presidential election results will be the story of the week after an extremely long campaign season that has over-saturated the news media outlets and Facebook discussions for the better part of a year. Once the results are in on Tuesday, hopefully everyone can take a deep breath, lose some bitterness and all move forward together because - after all - we all play for the same team...

Hurricane Sandy ensured that this week's trading week would be a shortened one and all thoughts and prayers are with those suffering and still dealing with the aftermath of that terrible storm. Around us, however, the world is still moving forward; the politicians are still politicking, world economies are still slowing, and - most importantly to those following VFC's Stock House - our favorite (or not so favorite) stocks and stories are again trading along and moving forward.

Again, the bulk of our thoughts go to those who need the strength right now - in all of the world's flashpoints and flood zones - but here's a look at some of our much-watched stories right now...