Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
This Friday we will be issuing
a new profile. This is a very exciting technology company
that is already enjoying a substantial revenue stream. This particular
stock lost 40% of its value along with every other stock in April and early
May. However, this stock has not followed the rest of the market
down since the first week of May. Since it hasn't gone down in the
last month, it's probably not going lower. Therefore, if the stock
holds steady this week, the entry level is ideal. They have a product
that can be used by nearly every company in the world, and their production
is skyrocketing.
 |
Market Comment |
|
Today's sloppy action on the NASDAQ
confirmed what we had suspected- the Bear still roars. The NASDAQ
ended the day down 53 points. The lack of follow through from yesterday's
largest percentage gain in history was a little disappointing, but the
market did not give much back and could easily rally for the rest of the
week.
We were encouraged by action today
in some of the smaller issues that we follow. PhotoChannel,
our current profile did well the first day after its release, but has subsequently
drifted down on light volume. Today the stock showed some signs of
life by trading over the 300,000 shares between the US market and the Montreal
exchange. The stock was up 15% on the Montreal Exchange, with a smaller
gain in the US.
Envoy Communications also
put in a half decent performance with a 2.6% gain on nearly 300,000
shares. Anybody that took the time to listen to last night's conference
call should be very excited about owning this stock.
At the end of this week there will
be economic data coming out which should help the market find its direction.
Until then, look for sloppy trading with an upside bias. Entry levels
are wonderful right now with little downside risk.
 |
PhotoChannel
Networks (OTC BB: PHCHF)- Recommended by Emerging Growth Stocks |
 |
One of our members alerted us to
this newsletter which is recommending PhotoChannel Networks (OTC BB:
PHCHF). Louis Paquette, the editor of the newsletter,
has a buy recommendation $4 to $5 price target on the stock. His
target is in Canadian dollars, so that would put his price target at about
$2.50 to $3 US.
We found a review of his recommendation
at www.stockhouse.com, one
of the premier small cap sites. You can go to their home page at
look it up under the symbol PHCHF, or simply click
here and you will taken directly to the page with the review.
|
Defensive
Trading Strategies For This Market- Using the Gap |
|
This is a reprint section from last
weekend's edition. We had technology problems with last weekend's
release, and we wanted to make sure everybody read this section.
Congratulations if you are a buyer
in this market. You have the courage to put your money to work at
a time when the rest of the world is paralyzed by fear. You will
make the most money when the market turns up.
A good strategy to use in a market
like this is to allocate a certain portion of your capital to a stock you
want to own. Start out by only investing 1/4 of the total amount
you are prepared to commit. That way you can add to the position
if the stock trades lower and take advantage of other people's weakness.
This only applies to investors that are prepared to hold for at least four
to six months- if you view yourself as a trader you must follow the short
term trend.
A very important rule in a market
like this: never buy a stock at the market when it Gaps Open.
A Gap occurs when a stock opens at a much higher price than it closed at
the previous day. In a market like this, 90% of the time that stock
will drop back down and fill the gap. Market Makers have been using
gaps to line their pockets with money from investors for years.
When market makers have market orders
for a stock at the open, they will often take the stock up, fill the market
orders at the higher price by shorting it to investors, and then drive
the price back down. Then when they have scared enough people into
selling, they cover their short and walk away with a tidy trading profit.
We noticed that this happened last
Thursday with New China Homes (NASDAQ: NEWC). In last
Wednesday's edition we featured the company as one that would benefit greatly
from China receiving most favored nation status after the vote in the House.
On Wednesday the stock closed at
$7. On Thursday there were buyers in the stock at the open.
The market makers opened the stock at $8 1/4, filled everybody's order
on the gap, and the stock immediately turned around and went straight back
down. Traders refer to this as "Filling the Gap". The stock has been
dropping since Thursday morning, and can now be picked up in the $6 range.
In a market like this you must always
use a limit order and exercise some patience. If you wanted to pick
up New China Homes on Thursday morning you should have placed a
limit order no higher than Wednesday nights' close and waited for the stock
to come to you.
Most of the China related stocks
which had traded so well prior to the vote in Congress got clobbered at
the end of last week demonstrating that the Bears are in total control.
This strategy also works most of
the time when a stock gaps down at the open. Don't be spooked into
selling immediately. If you want to sell the stock it will come back
up 90% of the time, rebound enough to fill the gap, and then go lower if
the news is bad.
All of these trading strategies are
very short term. If you are an investor for six months to one year
in New China Homes (NASDAQ: NEWC) it won't make much difference
if you own it at $8.25 or $6.25. The stock will either perform or
it won't. However, it just makes good sense to prevent market makers
from lining their pockets with your money by using the same tricks that
have been working for years.
We will be back Friday after the
market closes with a new profile. |
