To OTC Journal Members: 
 

Thank You China Banks

The DOW is down about 150 points today, suggesting we might be in for a bit of a correction. Fueling the pullback is news out of China- The government has directed China banks to stop making loans for the remainder of January. Further exacerbating the market's temporary love affair with all things China is news out from the Chinese Banking Regulatory Commission suggesting the pace of new loans in China would be down 22% this year from last year's record pace.

While the market might not like this temporarily, I think this is wonderful news. Here's why- a number of very profitable China companies have been raising substantial amounts of capital with the US based investment banking community this year. I have personally invested a substantial percentage of my own capital in China situations.

Here's the reality of the US economy on a global basis- there are only two things we do really well- Innovate, and Finance. We are the world's best innovators- a tradition fueled by our love of capitalism, and we still have the world's most effective markets and investment banking community.

The Chinese government encourages capital formation outside of it's borders. The Chinese investment banking community is in its infancy, and the Chinese love having global capital find its way to China.

If there is no capital available for business expansion in China, companies will continue to seek from our institutional and individual investors (like myself), and we will continue to see exciting opportunities to participate in substantial growth and profits.

Once the Chinese Investment Banking industry grows and matures, participation might be harder to come by. Thank you Chinese Banking commission- I need a few more years of these opportunities to retire.
 

Some Updates

I've been yapping about a new idea in the penny stock arena in biotech- I'm going to try to launch it tomorrow after the market closes. Stand by. A little more research to complete. And, speaking of penny stocks- here's one you've all been asking about to get into now: 
 

Options Media Group (OTC BB: OPMG)

This is the one I told you to buy last spring at $.40, and it was a loser. 

Then I told you not to buy it on back on December 17th after the stock had traded millions of shares and run from $.05 to $.18 in a few days. I called it a stock to watch, and stated those kinds of rallies were selling opportunities- not buying opportunities. I followed my own advice and sold every single share we owned between .16 and .19.

Lots of you sent emails asking when it was time to buy- answer- now- the chart is telling me it's time to see if we can get another run. Look at the chart. Notice the meteoric run from $.05 to just over $.20 in December. I said it was a selling opportunity and told everyone to sit on the sidelines.

The stock crashed as I expected, but now it appears to have bottomed. I've been waiting for the stock to find a bottom on lighter volume, and start to turn back up on much higher volume.

The price turn around has now started, and there's increasing volume associated with the price movement up. If you were watching and waiting, now is the time to jump back in. I will be buying some for my account tomorrow.

The company has just raised a boat load of capital and I'm hearing their numbers are going to be great in Q1- it's clear the market is buying into this as well. If you were waiting to get in, do it now.
 

Biocurex (OTC BB: BOCX): Now We Know

BOCX is another one I get lots of emails about. I have been telling everyone the stock was dead money until they got through the regulatory process and priced their financing.

Yesterday, it finally happened. The SEC declared the reg statement effective yesterday, and the final pricing was negotiated on the deal. The company has ended up issuing about 84 million shares at $.074 per share. 

Included in the financing for each investor was a warrant- 84 million of them convertible at about $.11 for 5 years. 

So, let's get quickly to both the good and the bad news. The bad news- technically, this represents one hell of a lot of supply. Based on the way the stock traded yesterday, it's obvious some percentage of these new investors were happy to quickly dump their shares for a very small profit or about a break even. The market didn't absorb 84 million shares, but it sure absorbed a big swack of shares.

A strategy some brokers might advise in a situation like this would be to dump the shares at a very small profit or break even, then hold the warrant long term at no risk in case the stock does really well. If this were the case, it would represent a whopping supply.

I believe the stock could trade up from here probably back into the $.10 range. The big issue is how it gets past $.15 or so with 84 million warrants at $.11. Technically, this could be tough sledding. Look at the chart- as you can see, the stock traded gigantic volume yesterday to the downside and found support at $.07- it's no accident this was the level of the financing. They are not willing to sell at a loss, but if it trades much below $.07, all these new investors might just flood out and really decimate this thing. 

On the very positive side, BOCX will now have about $6 million to work with, and that's huge. They are going to pursue the commercial roll out for animal cancer testing this year, and move towards FDA approval for human testing very soon. This gives the company substantially greater upside than it has ever had.

Stand by for further updates. As it stands right now, I believe the stock could be capped for the near future pending corporate developments, but not much downside from here short term.
 

China Plays

Just a quick note about by #2 and #3 China picks. China Recycling Energy (CREG) announced some preliminary information on their year end numbers. In Q4, revs are expected to be about the same as Q4 '08, but profits will be up. This was a bit ahead of what the company had previously forecast, and it reflects the transition to these recurring revenues with no cost of goods. Their numbers on the recurring side will just keep growing. This stock is eventually going higher in my view.

NF Energy (NFEC) was out with news of another new contract this week. It's another hydro electric valve contract, and the company just continues to hit the ball out of the park. We've had a huge move in this one, but I'm continuing to hold my shares looking for higher levels.

I like both companies to get upgraded listings in the not too distant future, and I believe there is both multi month and multi year upside here.

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