While there's technically no need to specify "nodead" since Penance can't be cast on a dead target, it's better to keep it so you don't end up with the "glowing hand" cursor. I'd also add "nodead" to the mouseover check so it also ignores dead mouseover targets:
Code:
/cast [@mouseover,nodead] [nodead] Penance
(And I'd keep the spaces to improve readability in the tiny in-game macro editor.
)