To OTC Journal Members:
 

Bloody Wednesday: Cash At Any Price

It has certainly been a lousy week for several current ideas. eReasearch (NASDAQ: ERES) and M Systems (NASDAQ: FLSH) both sold off on great earnings reports. I'm still hanging in there on both of those ideas as we are now coming into the seasonally strongest time of the year to be in stocks. If I sell them, it won't be on a knee jerk reaction from a market that only cares about energy. I'll wait until everyone loves them again and they have some momentum to the upside. If they had poor earnings reports it would be a different story.

In an even more bizarre twist of events, yesterday four of the OTC Journal's favorite microcap situations got clobbered for about two hours during the middle of the trading day. It was as if someone with a large block in each of the issues put in a market order and the stocks just tanked. VTSI, NTDL, NWKI, and NWAV all had inexplicable big red candles on their charts yesterday.

By the end of the day the selling subsided, and three out of four are starting to rebound. 

I have a couple of theories as to what might have happened. One relates to the timing. Many funds have their year ends at the end of October. A few hedge fund managers could have been cleaning up positions in order to have these stocks out of their portfolios before year's end. They were raising cash at any price to clean up the positions.

At any rate, yesterday's action was indicative of someone or several investors who were raising cash at any price. The bizarre part was that it all happened on exactly the same day. 

Despite this one day set back, three of the four stocks remain in uptrends as measured off their 2004 lows. Here are some thoughts.

Network Installation went into a free fall yesterday, but has since stabilized and is now trying to rebound. As measured off the 2004 low in August, the stock's uptrend remains intact. 

In fact, of the four stocks that got beat up yesterday, I believe this one represents the best opportunity. More thinly traded microcap stocks are vulnerable to these kinds of violent swings. As long as this stock remains above the $1.47 level, the uptrend remains intact and a rebound is highly likely. This one could be the best buying opportunity of the four.

NeWave gave some ground on extremely light volume. This stock is very thinly traded, but made a beautiful 50% move off the August low. The company is growing like crazy, has very high margins, and is moving into several new and exciting arenas of business.

I believe volume and interest will pick up considerably in this issue as we get nearer the end of the year. The uptrend clearly remains intact on this issue. This stock should be accumulated in the $4 range for the risk end of your portfolio.

VirTra Systems gave a lot of ground yesterday as someone decided to raise cash at any price. The chart has a big volume spike, but not nearly as big a spike as it had when the stock last traded up on good news. The up days having higher volume is a good technical sign.

VTSI's inability to break through the $.41 level earlier this month after they announced the huge sale to the Mexican FBI was a big disappointment on the technical side, but a major breakthrough on the fundamental side. This was the first major multi unit order the company had received. 

After the market closed yesterday, Chairman Kelly Jones sent out a letter to investors via email assuring everyone that nothing had changed at the company. He disclosed that the company was working on a proposal to debt holders which would allow for a conversion of debt to equity, and improve the balance sheet considerably.

The company has had a great year fundamentally. The stock has not followed suit. If the company continues on its current expansion path, the stock will follow suit at some time in the future. Perhaps the next try at $.41 will lead to the big breakthrough.

Technically, the stock broke below the uptrend line savagely, but turned around and headed straight back up. I would like to see the stock stay above $.34 to be convinced the uptrend is still intact. It is camped right at that level today. It appears the stupid seller is out, and the stock is ready to rebound. 

NuTech Digital also inexplicably got clobbered yesterday. I know of no fundamental reason for the sellers to suddenly appear, but they were certainly there.

Volume has been way above average for the last two trading days. The buyers seem to be matching the sellers at about the $.22 level. This stock has been nothing but a nightmare since the company's registration statement went effective earlier this year.

The uptrend off the September lows has been broken, and the stock is not showing any signs of rebounding the way VTSI rebounded. Technically, the only positive I could point out is that the stock has not traded below the September low, and seems to be trying to claw its way back up a little.

As far as I know, NTDL's business remains robust. Their are cash flow positive from operations, and we will see a revenue improvement in the September numbers.

This one could be good for a trade back to the downtrend line if the aggressive sellers run out of stock.

Go Here to view our compensation on every company we have ever covered, or visit the following web address:  http://www.otcjournal.com/disclaimer.html for our full profiles and http://www.otcjournal.com/trading-alerts/disclaimer.html for Trading Alerts. MarketBtye LLC has been paid of fee of $25,000 in cash and 250,000 newly issued, restricted shares by NuWave for coverage of the company. MarketByte LLC has been paid of fee of 50,000 free trading shares by NuTech Digital for coverage of the company. On March 24, 2004, the orginal agreement was ammended. Cumulatively, the company has paid 50,000 free trading shares and 210,000 resricted shares. 110,000 of the aforementioned 210,000 have become free trading by inclusion in a registration statement. MarketByte LLC has been paid of fee of $25,000 and 500,000 post split newly issued restricted shares by NetWork Installation for coverage of the company. The aforementioned restricted shares are now eligible to be free trading due to an effective registration statement and maturing under Rule 144. MarketByte LLC has been paid a fee of $25,000 in cash and one million newly issued restricted shares by Virtra Systems for coverage of the company. Under Rule 144, 500,000 shares of the aforementioned one million shares are now eligible to become free trading. Please review our policy on selling shares found in the mission statement at our home page. 

All statements and expressions are the sole opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities  mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.

From time to time MarketByte LLC sells shares in the open market it receives as compensation for coverage of client companies. Since the shares are received as compensation for services as previously disclosed, and not for investment purposes, the editors do not view the sale of the shares as contradictory to any advice delivered in the content. This should be viewed as a conflict of interest by shareholders or prospective shareholders of the client companies. 

The editor, members of the editor's family, and/or entities with which they are affiliated aside from MarketBtye LLC itself, are forbidden by company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies who appear in the publication unless specifically disclosed in the newsletter. Some of the companies featured in the OTC Journal pay a cash ESP fee to an affiliated technology company ranging from $2,000 to $5,000 per month for internet related technology services. 

The profiles, critiques, and other editorial content of the OTCjournal.com may contain statements that appear foward relating to the expected capabilities of the companies mentioned herein.

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN  SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN  CONSENT OF THE EDITORS OF OTCjournal.com.

We encourage our readers to invest carefully and read the investor information available at the web sites of  the Securities and Exchange Commission ("SEC") at http://www.sec.govand/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at  http://www.sec.gov/consumer/cyberfr.htm. Disclaimer ID:$subst('Recip.userid') Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site.  MarketByte LLC's mailing address is 3525 Del Mar Heights Rd #334, San Diego, CA 92130.