Some talking heads have recommended an escape to larger stocks. But those waters are far from calm. The S&P 500 is also having a rough go of it. It’s on track to have its worst year since 2002.

Don’t panic. Times like these test your resolve. And while others are fleeing the carnage, there are shares of plenty of small, ignored companies out there begging to be bought. The market is offering you massive opportunities right now. Many stocks are testing 52-week lows. Naturally, the market is unfairly punishing these companies.              

It’s partly tech stocks that have infused a healthy dose of fear into the NASDAQ. The establishment is convinced that slowing growth will take its toll on the likes of tech leaders Google and Apple.

As these names were hit, smaller stocks felt the reverberations. When the NASDAQ took a beating this earnings season, it seemed like it was almost impossible to win. No news seemed good enough, and earnings reports, no matter how positive, caused share prices to go flat or continue to fall.

It is through this volatility that we are able to find some of our best opportunities. After all, wide price swings make people money, and create massive buying opportunities. Looking beyond positions, the market has offered you a variety of options. Many stocks are testing 52-week lows. Naturally, some of these companies are being unfairly punished. That’s where we’re looking for the majority of our penny stock opportunities right now…

Just take a look at this chart:

That’s the performance of the Russell 2000 — the benchmark small-cap index — between November 20, 2002 and the end of 2003.

From its lowest point in early 2003, the Russell rose 60% in a little less than 10 months. We’re not saying 2008 will provide the same results. But it is clear that when small-caps bounce back, they do it in a big way. The S&P 500 only squeaked out a little more than 30% over that same timeframe.

Finding the bottom-bouncers now will set you up for the big returns when things begin to turn around. You’ll be in while everyone else is getting out. And you’ll be rewarded while everyone else watches the one that got away…

Now that’s a position you want to be in.

Those who invest in Bulletin Board stocks have been able to ride out some of the market’s fluctuations under the radar. But this doesn’t mean we haven’t felt the effects of a down market at all.

We’ll tread on, looking for the best of the basement stocks… Until we find one…

Best,
Gunner
December 5, 2007

P.S.: Since this is the perfect setup for you to get in on promising tech shares on the cheap, we have a new high-tech startup that’s ready to take off.

Penny Stock Market Trends was originally featured in the Penny Sleuth.