To OTC Journal Members:
 

The Short Reload: We're There

Here's an update for those of you who have been following my trade to make money by betting on what I believe is a corrective phase in the market. It's not complicated- it's simple. After a brutal January to March, the market simply steamed up the charts for two months without taking a break. I don't believe that type of move is sustainable against our current headwinds in the economy. I believe we need a correction to set the stage for the next leg north.

Here's a pretty complex chart of the way I see it setting up. I know there's lots of circles and arrows, but hang with me for the explanation. I'm betting the NDX, which is the index for the NASDAQ 100, has a date with lower levels. I don't believe the same upside exists for the DOW or S&P, as those indexes have already corrected.

Last week the market gave me a pretty good opportunity to close out my trade in QID when the NDX hit 1907. Alas, I was away from the computer, and missed the chance. Had I been where I belonged, I would have sold and waited to reload. It's amazing the way it went to the 1907 level just as set up on the chart.

The NDX has rebounded over the last 3 trading days, and I believe it is has given me another opportunity to get shorter. It has nearly found its way up to 2000, and just about completed a 61.8% move back to the upside of the drop from 2056 to 1908. This is my opportunity to go a little deeper.

I'm pretty sure the NDX has a date with 1908 again- the bigger question is whether it will give way, and 1816 will be the eventual target for this index. That's iffy, but could easily happen if oil continues to head higher.

I currently own 2,000 QID at $38.76- however, I did manage to scalp a $1600 profit on some options last week while in this trade, so I look at it more as if my cost basis were about $38.00. QID will go up if the NDX goes down on a 2 for 3 basis.

This morning, as the NDX approached the 2000 mark, I picked up 50 July 49 puts on QQQQ (the NDX ETF) at $1.45- total investment $7,200. Let's see if we have another date with 1908.
 

Attention Oklahoma microcap investors. Your turn has come. From day one I have been saying- if you haven't had a chance to try the food at Spicy Pickle, you will eventually as the chain expands all over the country. If you live in Oklahoma, go treat yourself to lunch.

Usually, I show and image of a store. Let's do something different today. Here's a picture of the product- one of the grilled pannini sandwiches. The bread is a proprietary recipe, baked fresh everyday at each individual location. Yes, the pickle is spicy.

The meats and cheeses come from the same suppliers who deliver to Whole Foods. Very high end- no preservatives. I'm getting hungry just looking at the food. I've had it before. I you haven't, I suggest you give it a try. It's just fantastic.

As of today, the 41st store in the chain opened. Based on franchise commitments, there are about 90 more to open over the coming years. Today not only marks the opening of the 41st store, it also marks the 13th different state Spicy Pickles are now in. Considering it was only in the Denver area a few short years ago, that's a pretty remarkable achievement.

The theme for this idea remains the same- go try the food, and make your own judgment. After trying the food, if you believe as I do this chain will eventually be 500 stores, you can make a lot of money on this idea from its current levels.

The stock continues to behave as it has for the past two months. The last big volume surge happened when the company announced it's same store sales were up nearly 5% in Q1 over the previous year. I believe that's pretty remarkable in the current recessionary environment.

At some point, volume will return to this issue, and when it does the stock should be able to move up fairly easily. Long consolidation phases provide spring boards for higher levels when companies achieve growth.

SPKL's real estate division is currently looking for properties in about 10 different states. There are other opportunities in the company's path. It could be a quiet summer, or it could break out. A little early to call. 

In any case, the company continues to expand and open these annuities that pay forever, allowing for a very stable recurring revenue base. Why to know why? Go try the food.

Here's where you can go in Oklahoma starting today:
 

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Go Here to view our compensation on every company we have ever covered, or visit the following web address: http://www.otcjournal.com/disclosure/compensation/section/profile/ for our full profiles and http://www.otcjournal.com/disclosure/compensation/section/alert/ for Trading Alerts. Larry Isen, the editor and publisher of the OTC Journal, through various entities he controls, has purchased 1,200,441 shares of Spicy Pickle at an average cost of $.2125 per share. These purchases were made in Spicy Pickle private offerings. The aforementioned purchases were made between August of 2005 and August of 2006. On 12/15/07, on entity controlled by Larry Isen participated in an additional financing wherein 12 shares of convertible preferred, converting at $.85 into 120,000 shares and 90,000 warrants with an exercise price of $1.60 were purchased. In addition, Larry Isen has received 785,000 shares of Spicy Pickle common stock for consulting services and has purchased 213,343 shares in the open market at an average cost of $.89 cents per share. In addition, MarketByte LLC, an entity controlled by Larry Isen, has received a fee of $30,000 cash, and 300,000 newly issued restricted shares for coverage of Spicy Pickle. TGR Group LLC, the publisher of the Small Cap Network, has received $30,000 and 300,000 newly issued restricted shares for coverage of Spicy Pickle. Mr. Isen is an affiliate of TGR Group. In addition, two other individuals affiliated with TGR Group have purchased a total of 300,000 shares at $.25 per share, 21,961 in the open market at $.76 per share and received an additional 70,000 for consulting services. Current positions of the aforementioned can be found at www.otcjournal.com and www.smallcapnetwork.com in the Spicy Pickle information section. 

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