From what I've seen there is a correlation - in fact it is very strong - it tends to be amplified in whatever direction the general market goes. However, it may well be that when the market is relatively flat in general, the pennies can have a mind of their own.
But, there still is a reason for the cycles and that reason is what I have been trying to understand. Sleazy CEO's, promoters, and converting note holders wouldn't account for it though unless they follow some kind of cyclical patterns. Market psychology might though, as you have suggested.