To OTC Journal Members:
 

Market Comment

Evidence continues building that the nasty Bear Market which has decimated shareholder wealth over the past 2 1/2 years is getting long in the tooth, and the probability of a market climate favoring the long side and a return of the Bull is increasing.

Long term subscribers of the OTC Journal suffered with some very bad ideas between October of 2001 and mid 2002. 

However, just like the lump of coal that turns into a diamond by doing its job over the long term, the OTC Journal has treated its subscribers to several ideas that have provided very substantial returns since the beginning of August, and we intend for the trend to continue as the market climate improves. A review is provided below.

The market has been mired in a pattern of lower highs and lower lows since March of 2000. A look at the NASDAQ chart extending back to mid 2001 paints the picture. Every rebound eventually yielded to a lower low, and selling or shorting rallies has been the best way to generate trading profits.

However, the outstanding performance in the markets during October may have brought the first harbinger of a changing trend. A common sense look at the second chart tells the whole story. For 2 1/2 years each pullback was lower, and each rebound was lower. 

The October rebound took us back to the August high. Therefore, for the first time in 2 1/2 years the market rebounded to its previous high, not a lower high. It is a classic stand off. This pattern suggests we are well into the bottoming process, and the long term downtrend may be reversing.

We believe the NASDAQ is entitled to pull back into the 1260 to 1290 range, which would keep the uptrend intact. In fact, if and when the NASDAQ drops below 1300, we will start actively seeking trading opportunities once again. For the time being, we feel the NASDAQ will continue down in a reasonable corrective phase.

The real test will come in the 1250 to 1300 range. If the NASDAQ can hold these levels, and then rebound above 1430, the uptrend will be confirmed. If the NASDAQ does not hold, look for more pain. Stand by for updates as evidence builds.

Earnings were stronger than the market anticipated in the September quarter, and this fueled the outstanding October performance. Earnings performance was driven by cost cutting. In order to get any momentum in the markets, top line growth must return next year.
 

New Ideas Since August 1st - The OTC Journal Delivers Several SuperStars

Above find a table of every new stock idea we have provided since August 1st 2002. Had we published this table on Wednesday, the returns on several of these issues would have been much higher. Click on the date to read the edition associated with the named stock.

Our two standouts were QLGC and AMD, coming in with 86% and 62% returns respectively in just one month. Moreover, the options we suggested in the QLGC recommendation provided extraordinary returns, and proved to be our best ideas in three years.  The Nov 20 calls we suggested at $3.80 closed today at $22, and the Nov 22.50 calls at $2.50 closed at $17.70 today, notching gains of 480% and 608% respectively in one month. In the edition we stated we were looking for QLGC to rebound to about $28, so any gains you enjoyed beyond that point were based on your own good judgment and luck.

We list a Stop Loss for each of the ideas we covered. In some cases, as with JLWT, FDRY, and MLNM (all losers), we recommended specific stop loss levels. If you owned the stocks and held them below our suggested stop loss levels you made a mistake. If a specific stop loss is not stated, assume 20% to be a good rule of thumb for the larger cap names. A 30% stop loss and a longer time horizon for the microcaps like FMLY and SWEB will give you the best opportunity to make money.

You might legitimately point out this table does not properly reflect true returns you could have enjoyed as the initial price is based on the closing price the day of our edition, not the opening price the next day. This definitely skews the results, and therefore you cannot assume this table accurately represents trades you could have made to the penny. It is only intended to be a guideline.

If you read about one of our ideas, and you find the stock much higher at the open the next day, just wait. When stocks, especially microcap stocks gap open, they make their high for the day in the first half hour of trading. Use a limit order close to the closing price the previous day to avoid paying too much.

Ultimately you must look at the OTC Journal as a source of ideas. You might like some, and not like others. It is your money at risk, and you should only invest when you feel the ideas we provide have merit.

We continue to look for major break outs in microcaps. While we haven't seen significant price appreciation in our favorites, which include FMLY, SWEB, XMLG, and CALY, volume is picking up. These stocks are just becoming liquid for the first time in two years. Pullbacks should be viewed as opportunities to accumulate for pending breakouts as demand resurfaces.

With interest rates at 40 year lows and housing prices at all time highs, investors are slowly turning back to the stock market, which is exactly what the FED intended when it surprised everybody by dropping rates 1/2 point this week.

SwingWire.com also has a lucrative incentive model for experienced investors and traders who consistently outperform the market. Share market ideas with other like-minded investors, establish a proven track record, provide insightful commentary, attract followers and ultimately become one of the Internet's highest paid and most sought after CyberAnalysts! 

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Click 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.

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.

The editor, members of the editor's family, and/or entities with which they are affiliated, 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.

The profiles, critiques, and other editorial content of the OTCjournal.com may contain forward-looking statements 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:xG1jf4ll 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.