Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
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Special
Announcement |
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We expect to issue a Trading
Alert on Friday just after the market closes. Investors need to pay
careful attention to our recommended entry point. Our last two gapped up
too dramatically. Dupont Direct (OTC BB: DIRX), which we issued
on January
4th, was recommended up to $1. The stock opened at $1.39
on the following Monday morning, too high for a high probability profitable
trade. The same happened with Decorize (AMEX: DCZ), a Trading Alert
we issued on March 8th at $3.65. Our maximum entry point was $4,
and the stock opened at $4.40. Please read the edition very carefully
paying particular attention to the recommended maximum entry point. The
news we expect on this relatively unknown stock could take it up rapidly,
and you could easily get caught up in the dramatic rise and pay too much.
However, if the stock cooperates
and provides investors with a chance to grab shares, this could be one
of our most exciting ideas. The company is one of the most speculative
stocks we have ever reported on, so this idea will not be for everyone.
In fact, it probably will be too risky for you. However, this This Trading
Alert concerns a major breakthrough in the International fight against
AIDS
(Acquired Immune Deficiency), so the information will interest many
investors.
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Stock Message
Boards- Information or DisInformation? |
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Last week Anthony Elgindy,
high profile short seller and proprietor of stock bashing web sites www.insidetruth.com
and www.anthonypacific.com, was indicted by a Brooklyn Grand Jury
for racketeering and securities fraud conspiracy.
Also indicted were one accomplice,
one former FBI Agent who worked for Elgindy, and one current FBI Agent.
The charges allege that the FBI databases were illegally used to obtain
information about public companies and their officers and directors. Once
obtained, the Elgindy network used his own web site, contacts, and
message boards to "Cybersmear" a company.
Elgindy or one of his accomplices
would then attempt to extort a payment out of the target company in the
form of stock in return for instructing their network to cover their short
interest and leave the company alone.
You might think this is an isolated
incident, and you would be wrong. This type of conduct is widespread in
the micro cap world, and more prevalent than most investors realize.
In fact, short sellers have attempted
to extort free shares out of several of the companies we have covered.
It's business as usual in the microcap world.
The open forum stock message boards
which used to be valuable investor tools have become plagued with paid
shills for the short sellers and used in order to spread disinformation
about companies. If you choose to go to a message boards of a company you
are considering investing in, you may find it dominated by bashers who
seem intent on smothering any positive comment on the company.
It is widely known that many of these
posters are paid under the table by short sellers who are attempting to
frighten investors into selling. This is truly unfortunate because the
message boards used to be a viable forum for investors to exchange ideas
and opinions based on facts and reasonable assumptions.
The point- you should confirm as
thoroughly as possible through third party sources anything you hear or
read on any company you are considering investing in. This applies to both
information you get from the OTC Journal, and especially information
you read on a stock message board.
Occasionally you will read a negative
comment with based on facts with reasonable assumptions. These types of
comments are worthy of your consideration, but it can be difficult to separate
quality from smear.
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Our
Disappointment |
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When we first read about the Elgindy
indictment, we had hopes that the SEC was finally taking some action to
stop these illegal smear campaigns. However, several articles in the Wall
Street Journal on the incident revealed the FBI learned of this illegal
activity accidentally.
As it turns out, the FBI happened
to have been monitoring the activity of its own agents in the aftermath
of the Robert Hanssen spy conviction. Elgindy was also being monitored
for potential terrorist activities as he is a Muslim and a well known contributor
to many Muslim organizations.
We were hoping this investigation
would mark the beginning of an SEC crackdown on the illegal short selling
and subsequent smear campaigns which the SEC has chosen to overlook for
some unknown reason.
We are not opposed to hearing both
sides of the story on any company we cover, but short sellers should have
to operate under the same rules which newsletters like ours adhere to.
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Conclusion |
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Perhaps the regulators have consciously
chosen to ignore the illegal smear campaigns because they view them as
a mechanism for preventing excesses in the market place.
Ultimately, every idea we bring you
will succeed or fail entirely on the merits of the company. Diomed
(AMEX: DIO) is the classic example. If the company successfully roles
out its revolutionary therapy for Varicose Veins, the company will probably
achieve $50 million in sales next year, its detractors will be proven wrong,
and shareholders will make a lot of money.
If, on the other hand, the company
fails to obtain market share with EVLT, the company's detractors will be
proven right, and our members who own the stock will undoubtedly lose money.
In the short term short sellers have
provided a favorable entry point for investors willing to take the risk.
Perhaps this is why the SEC allows these types of activities to continue.
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Cross
Media (AMEX: XMM) In the News |
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Today Cross Media announced
the completion of its pending acquisition of JWE Enterprises. Click
Here to read the full text of the news release. The company also reiterated
its projected sales of $200 million and EPS of $1.30 this year.
The stock has now been trading sideways
since early April when the company announced the pending FTC action. The
stock will probably continue to trade in a range until this issue is resolved,
at which time it will probably rapidly continue its temporarily stalled
ascent.
We have no idea when the news will
come out or what it will be. It is our belief the matter will be settled
without significant negative effect on this year's earnings picture.
Have patience, and accumulate for
the next leg up.
In the interest of
full disclosure, we inform you that one of our editors owns 3000 shares
of Cross Media in his own personal account, purchased in the open market
with a cost basis of $9.185. Our editor is free to buy and sell the stock
any time at his own discretion. This should be viewed as a potential conflict
of interest.
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