Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
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The War, Super
Bowl, and the Markets |
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Investors are focused on three subjects-
The War, the Super Bowl, and the Markets in that order. With the exception
of this Sunday afternoon, the potential for war is foremost on the market's
mind. Like going to the dentist, the anticipation is becoming worse than
the actual event. With the event and the potential outcome still unknown,
the market is demonstrating its displeasure by tanking everyday.
2003 market conditions made our January
15th edition the best this year. Entitled "Tony Soprano Says
'Forget About It'", we advised investors there were no good trading
ideas until the market broke one way or the other as it was range bound
while awaiting the outcome of potential geopolitical events. It is now
breaking towards some ideas on the long side, and we could be setting up
for another "Hall of Fame" edition.
On October
12th, 2002, we published our single most profitable edition of 2002.
We were lucky enough to hit on three very profitable trading ideas just
prior to a powerful rebound in the NASDAQ. The market is setting up for
another similar edition.
The candlestick chart we have provided
shows the steep decline from August to early October. Note the proliferation
of red candlesticks, depicting heavy selling pressure and volume skewed
to the sell side. Sell side pressure dominates the chart again, and seems
to be accelerating as we come closer to the January 27th report from the
UN Weapons Inspectors and the State of the Union Address.
We believe there are two possible
scenarios for the NASDAQ, and both involve continued erosion. We could
trade down to the 1310 level, which would represent a 50% retracement of
the October to December surge, or we could complete what some would call
the right shoulder of a head and shoulders pattern, suggesting the NASDAQ
could drop back to the 1100 level.
At 1310 we will publish a couple
of trading ideas with tight stops. If we are lucky enough to see 1100 again,
look for another high probability Hall of Fame edition like October
12th's when we recommended:
-
QLogic at $21.86- Since
as high as $45 (106% gain)- The QLogic call options we recommended were
up 480% and 600% respectively.
-
Advanced Micro Devices at $3.76-
Since as high as $9.50 (150% gain).
-
Comverse Technologies at $7.11-
Since as high as $12.80 (80% gain).
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Possible
War Scenarios |
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The market is tanking as we approach
the January 27th due date for the UN Weapons Inspectors. Rhetoric coming
out of the White House has the world convinced Bush is intent upon unseating
Saddam Hussein, and will initiate an invasion in February.
High profile and very vocal opposition
coming out of allies Germany, France, and Russia seem to be the only mitigating
factors having any affect on White House rhetoric.
We are guessing President Bush is
holding an undisclosed trump card, which he will play after the report
is issued. He will produce indisputable evidence that Hussein has hidden
weapons of mass destruction from UN Weapons Inspectors. He will use this
information try to sway our allies to our side, and challenge the UN Security
Council to take action.
If war is inevitable, a quick resolution
without interruption of oil supplies would be best for the markets. The
lower it goes in advance of the event, the more powerful the rebound when
the buyers strike ends, and the more critical your willingness to act quickly
will become.
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For
Now- Stick With the Microcaps |
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Here's an excerpt from our January
15th edition, which turned prophetic for shareholders of StockGroup
(OTC BB: SWEB) as it surged to a new high of $.38 this past
Thursday:
| "we recommend using this quiet time
to accumulate positions in the microcaps you like if they are
attractive, and wait for the inevitable surges that come with positive
news."
OTC Journal- January 15, 2003 |
StockGroup has pulled back
from Thursday's high as the stock drifted down with the market, yet we
still have logged a solid 68% return from the original entry
level suggested this past September 6th at $.19.
For those who understand the contrarian
investing style and want to do some bottom fishing in the microcap arena
while the market is tanking, we believe XML Global (OTC BB: XMLG),
Irvine
Sensors (NASDAQ: IRSN), and Family Room (OTC BB: FMLY) all are
likely to enjoy StockGroup like surges in the future.
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The
Super Bowl |
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The Oakland Raiders are favored
by four points over the Tampa Bay Buccaneers. Tough call. Oakland
has a potent offense and NFL MVP Rich Gannon is the starting quarterback.
The team is heavily stacked with veteran leaders and big play makers.
Tampa Bay has a tough defense and
an offense that has been getting the job done throughout the last third
of the season. In the championship game against Philadelphia, the Tampa
Bay defense held Donovan McNabb's potent offense to 3 points in the last
59 minutes in a very hostile environment.
This year's College Championship
and two out of the last three Super Bowls were won by the team with the
best defense. Ohio State, Baltimore, and New England all won their titles
with stifling defenses. In each of these three wins, the victor was the
underdog.
Take Tampa Bay and the points.
John Gruden, the real MVP is on the Tampa Bay sideline, coaching against
the team he built, and proving he was worth the money.
"I told you sos" are welcome if the
Raiders cash in. The Raiders have the edge in Special Teams, and that could
make the difference.
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Of TradePortal.com
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