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OTC Journal Members:
We believe the NASDAQ has
finally hit bottom. There was compelling evidence in the trading activity
of several bellwether technology issues this week.
Since Labor Day stocks have been
selling off on good news and getting obliterated on bad news. Earnings
disappointments yielded 40% to 50% sell offs. Earnings surprises to the
upside also led to declines in stock values after the news.
This week there is compelling evidence
to suggest these patterns have reversed. Technology stocks have been repriced
as if we are entering a full blown recession. Evidence of a soft landing
for the economy should yield higher prices.
Four stocks provide very strong evidence
of a major shift in market patterns this week:
This pattern of technology stocks heading
higher on bad news suggests stocks are ready to bounce. We still have a
lot of damage to repair before the bull market returns. However, this week's
action suggests we are past the bottom.
Apple Computer released an earnings
warning- the stock went up.
Xilinx released an earnings warning-
the stock went up.
Motorola announced an earnings warning-
the stock was only down $.375 on a down day in the market.
Intel announced an earnings warnings-
the stock went up $1 11/16. Intel has dropped from $75 to $32 since
Microcaps probably won't begin to
bounce until next year. Continued tax selling pressure and lack of interest
will keep a lid on small stocks. We believe small stocks will begin to
rebound by mid January. We should have good year in 2001 barring a full
There are several factors which could
derail the rebound- Continued uncertainty on the outcome of the Presidential
election or an inflation warning statement from the Federal Reserve on
December 19th. The Presidential Election is still up in the air, but the
Fed seems concerned about a slowing economy.
Between now and the end of the year
we will be publishing individual issues and interviews with management
of each of the companies we have covered this year. These will include:
We no longer communicate with StockGroup,
US Microbics, Engineering Power, Tropika, and NetSol International.
These companies will dropped from coverage. We may continue to publish
updates on NetSol International from time to time, but we don't
speak directly with management.
Visa Gold Explorations
These individual editions will serve
as the year end wrap up for each of these companies. If you hold shares
in any of them you can decide if you want to buy, sell, or hold. We will
do our best to try to get unbiased information from management.
Alert- Netro Corporation (NASDAQ: NTRO)
With the bottom in place we are going
to be very aggressive with Trading Alerts on small and mid cap stocks
for the remainder of December. There are some excellent values poised to
bounce off very oversold levels. Please read the section on Trading
Alerts at our home page to understand how these work. Click
Here to go directly to that section. Click
Here to view our Trading Alerts track record.
This weekend's trading alert is Netro
Corporation (NASDAQ: NTRO). Netro is a provider of wireless
networking equipment used by telecommunications service providers to provide
businesses with high-speed telecommunications connections. They are involved
in high-speed wireless technology.
The company has grown dramatically
in the past year. September's quarterly sales were $20 million, up from
$5 million the previous year. Netro also made a profit of $206,000
in the September quarter when analysts were expecting a loss of $.03 per
share. Netro currently has nearly $6 per share in cash.
As depicted in the chart, the stock
has been clobbered in recent months. At the end of September the stock
was $70. It's been butchered along with all the other technology
companies, and we believe it is technically poised to rebound next week.
The 10 day moving average is $10.50, and the stock is now solidly
above that number suggesting a trend reversal.
In the interest of full disclosure we
will mentioned that one of our editors purchased 1000 shares of NTRO
in his own account at $11.47. He may buy and sell the shares anytime at
his own discretion.
Buy NTRO between $11 and $11.50.
If the market gaps down on Monday morning this will represent an excellent
entry level. If the market gaps up please wait until 10:00 AM (eastern
time) to wait for a pullback. The election news makes the market very unpredictable.
One to Two week Target Price:
$15 at the first stop, then $18. Longer term investors might see
the stock fill the gap between $35 and $42 created in mid October.
Stop Loss- $10.25, and
please use it.
Next week we begin issuing our year
end editions on the above mentioned companies.
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