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OTC Journal Members:
NetSol International (NASDAQ: NTWK)
NetSol is a company we have
been following since January of 1999. The stock was our biggest winner
of all time, having seen a high of $75 (1835% return) in March of
2000, up from a starting point of $3.81 when the stock was on the bulletin
We issued a Trading Alert on this
same stock back on November 1, 2000 at $9.09. The stock hit $13.06
on November 6th for a 42% gain if you took the whole ride.
We set the stop loss at $10, so anyone following our advice would
have made money.
Earlier this week NetSol International
a press release concerning a recently closed financing which put the stock
back on our radar screen. The key feature of the press release went largely
unnoticed by the investing public. However, since Thursday morning, the
Journal has done a little detective work, and we now believe the stock
is positioned for a nice move to the upside.
Thursday's press release revealed
that NetSol International closed a private placement of 180,043
shares of stock with Deephaven Private Placement Trading, a division of
Trading Group (NASDAQ: NITE). The purchase price of the shares was
$5.55. The shares are not free trading as of this time.
NetSol has now taken the positive
step of making Nite Securities a shareholder. The largest market
maker in the world now has incentive to see shares of NetSol International
go higher. Nite has a history of making substantial returns on private
Furthermore, in an innocuous one
line sentence buried in the press release, NetSol mentioned they
had canceled a previously announced funding sponsored by Ladenberg Thalman.
The terms of this private placement would have been highly damaging to
the share price. This is a very positive development.
We are therefore issuing a Trading
Alert on NetSol International based on both the above mentioned
corporate developments and the technical features found in the chart below.
Note from the chart depicted here
that the stock has formed the infamous "Cup and Handle" formation made
famous by William O'Neill of Investor's Business Daily. The stock has "cupped"
nicely over the last month, and the handle is extending out to the right
on very light volume. This indicates a high percentage probability of
a move to the upside
on the next volume surge.
The stock is above its 9 day moving
average (the yellow line), but just below the 50 day moving average (blue
line). A break above $8.25 (the 50 day moving average) would be
very bullish, and probably signal a breakout into the $10 to $11
Therefore, here are the trading alert
Please review the rules for our Trading
Alerts found on the left hand menu of our home page. Please don't chase
the stock if it trades up too quickly. Either wait for a pull back or stay
away from it.
-Buy up to $8.50.
-Your short term target should be $10
to $11 (but don't be afraid to take a smaller profit if the market
gives it to you or let the stock run if it is trading well)
-Stop Loss- $7.25.
Use caution going into next week's
FOMC meeting. If Greenspan does not lower interest rates again, the market
will get clobbered. If he lower rates 1/4 point, the market will probably
sell off, but his will be a great buying opportunity for some of the larger
names. If he lowers rates another 1/2 point we will probably go higher.
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