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August 13, 2000
Volume III, Issue 76
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To OTC Journal Members:

Market Comment

September has been a tough month. The NASDAQ has dropped nearly 10%. Wall Street was buzzing with anticipation for the resurgence of the Bull Market after traders and fund managers returned from vacation in Post Labor Day work mode. As usual, the masses were wrong and the market has acted exactly the opposite of expectations.

The NASDAQ is range bound between 3800 and 4400 with no sign a breaking one way or the other. We are not technicians, but we talk to some very good ones. Expectations are for this pattern to continue through September and into October. We are looking for the Bull to return by November and give us another 15 month run, just like the one that started in November of 1998.

In the short term look for the market to surge back up above 4000. The excuse will be tomorrow's earnings release from technology bellwether Oracle Systems (NASDAQ: ORCL), which reports after the close. This week we  had pre-release earnings warnings for the September quarter. After the close tomorrow Oracle reports, and they always beat expectations. This event will turn the market back up. It will then find its way back up to 4200 or 4300, and then probably come back down again. There are boatloads of cash on the sidelines, but it is not finding its way back in for the long term.

Investors going bottom fishing over the next 60 days stand to do extremely well if they hold until the Bull comes back. In the interim the market will be choppy characterized by sector rotation.

PhotoChannel Networks, Inc. (OTC BB: PHCHF; MSE: PNI)

Experienced micro cap investors have an old saying: "Buy at the Wake, Sell at the Wedding". The performance of PhotoChannel Networks this week is the clearest example of that philosophy paying off.

We released our profile on this company at $1.58 on May 12th. After a choppy June and July the stock capitulated in August, and has been sitting at $.53 for the last month dead on the screen.

If you liked the company and had the courage to buy it when no one wanted it last week you could have nearly doubled your money. The stock has exploded this week on huge volume. It traded 93,200 shares today in the US and 462,762 shares on the Montreal Stock Exchange.It closed at $1 US and $1.40 Canadian today.

PhotoChannel has recently released a string of announcements concerning new management hires. They are close to rolling out their online digital film developing service, and the stock is being heavily accumulated. We wouldn't be surprised to learn of a major positive development in the near future simply based on the way the stock is behaving.

If you would like to learn more about one that is hot right now, you can read the original profile by clicking here, or go to the archive section on our home page.

Blue Zone (NASDAQ: BLZN)

Blue Zone, which is our current favorite stock, dropped $1 this week. The company issued a press release on Tuesday morning which we believe precipitated the drop.  We also believe the stock will head back up.

On Tuesday morning the company announced that it had completed a private placement of $4 million with an additional $1 million to be released once the underlying shares are registered.

Terms of the funding were not released which probably explains the drop in the stock. Investors assume the shares were issued at a substantial discount to the market causing a down draft in the stock. It dropped 1/2 point each of the last two days on relatively light volume.

We contacted the company to find out why the terms of the funding were not released. We were informed that SEC regulations prevent this information for being released until the registration statement is filed.

The market should be in for a surprise when terms of this funding are revealed. Time will tell. In the interim, every time BLZN has seen $6 it has bounced nicely. Aggressive investors should have a look at these levels. You may be buying at the wake, so that you can sell at the wedding.

StockTalkLive Update

The official launch was Monday, and guess what, it's not working. The system was designed to handle 1 million simultaneous users, but the front end login process could not handle the traffic load on Monday morning.

They are working around the clock to fix the problem.

We spoke with management today and they say it could be fully functional at any moment. Our expectation is that it will be fixed by next week. If you are logging in and getting to the white screen with the audio feed but no menu bar you are doing everything right.

In the interim Do Not EMail Us For Help. We don't support this service. Email

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The OTC Journal Newsletter is an electronic publication committed to providing our readers with useful information on publicly traded companies. The Newsletter contracts with publicly traded companies and receives compensation from them or third parties as payment for publishing information and opinions about the company and the trading market for their securities. Principals of the Newsletter may also purchase or sell securities of the companies in the open market from time to time. The positions, if any, that the Newsletter or its principals presently maintain in the securities of the companies are disclosed here (click here) and should be considered in making an investment decision regarding these companies securities. The Newsletter and its principals reserve the right to acquire additional shares or liquidate some or all of the positions they may hold in the issuer’s securities at any time in the future without further notice. These publications should not be considered to be independent publications concerning the company.

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