To OTC Journal Members:

Happy 4th of July weekend to all our members. Although we know that many of you might not have a chance to read this edition over this busy holiday weekend, it is an important issue, so please take the time to catch up later in the week.

In this edition we will share our observations about market conditions which we believe are setting up for a moderate summer rally, an update on  Blue Zone (OTC BB: BLZN) which we believe is on the cusp of a major breakout, and review strategies to help make money in our referral contest, which begins today.
 

OTC Journal Referral Contest

Today marks the formal launch of our $10,000 Referral Contest. We will be awarding $10,000 in prize money on September 30th to the top ten referring members.

The First Place winner will receive $3,000 in prize money, and the scale slides down from there. You can get a complete description of the contest and the rules at by clicking on the Start Now And Win Cash button on our home page. Click Here if you wish to be taken directly to the sign up page.

We have created an Internet solution that can be used by anyone with a minimum amount of computer knowledge to compete effectively in the contest. When you go to the sign up page simply enter your email address and hit return. This will take you to a web page with your Referrer ID#. More importantly, it will display a link with your Referrer ID# in it. That is your personal link for recruiting purposes.

That link will automatically open a web page which is your personal referring page. Anybody signing up on that page will be credited to your referrer number. You can copy and paste that link right off the web page and use it in emails to friends and on message boards all over the Internet. To copy and paste simply left click your mouse and pass it over the link until it turns dark. Then right click on the dark area, and left click on COPY. The link is now stored on your mousse's clip board, and can be pasted anywhere by simply pointing your cursor, right clicking, and hitting PASTE. You can now use the link to e-mail friends and associates. You can also use it on message boards all over the Internet. A web page will open for anybody that clicks on your link. If they input their email address you get credited with a referral.

The standings page is live and updates dynamically. As you recruit new members just hit the refresh button on your browser and your result will improve. We will continue to give you recruiting tips from time to time.

Don't bother trying to cheat. We will catch you. Each e-mail address entered will be confirmed as a live address with one week. If you manually post addresses off a list or input bogus addresses we will find out and disqualify you.

We are giving cash prizes to the top ten contestants. However, we will be giving some sort of prize to the top one hundred competitors. We are looking and making up hats and golf shirts as prizes for the top 90 that don't qualify for cash. An announcement on this will be made in July. Good luck. We are looking forward to writing the checks to the top place finishers.
 

Market Comment

We believe that the market, particularly in the small cap arena, has now set itself up for a decent rally through the summer. Small Caps are starting to show signs of life. NetSol International(NASDAQ: NTWK), our biggest winner of all time, came off a $17 bottom to rebound to $47 in three weeks. On Friday short sellers took the stock back down to the mid $30 in one day so that the stock could end the second quarter lower for fund manager performance. It will probably rebound from here.

The Russell 2000 is the best index for tracking small cap stocks. This index made a good bottom in mid April, rebounded, and then made a second good bottom in mid May. It has since rebounded and has been trading sideways since early June. This pattern suggests a high likelihood for small stocks to get strong as a rally expands into the broader market.

The past week was marred by earnings warnings from companies performing poorly in the June quarter. However, mid July takes us into earnings season, and companies that did not warn should post strong results.

Couple this with the FED not raising interest rates and you have a strong likely hood of a good rally. We are going to begin providing features on  companies, which we believe will rebound along with the market. Here is the first of those:
 

Some Thoughts on Blue Zone (OTC BB: BLZN)

Blue Zone is a software company which we have been following since November 12th, 1999 when we issued our profile and the stock was trading at $5. Subsequently, the stock hit a high of $15 3/8 on March 9th, and of course came down hard along with the rest of the market in April.

As broad band Internet Access becomes more wide spread various forms of media will blend more homogeneously. Eventually, the Internet, TV, Print Media, and Radio will all blend into one content source which will give the consumer more choices on the content viewed.

Blue Zone has been highly successful in developing the software which will bridge the gap between all these various forms of media. First generation software is targeted mostly at news organizations that need to create content for multiple forms of media on the fly as news breaks.

The company has received many awards, and its software is being implemented at CTV, Canada's largest TV network. Western Canada is far ahead of the US in digital, high speed Internet access installations. Therefore, the content that can be routed through the computer is more extensive and varied.

Recently we noticed that volume has been picking up in the stock, and it has made several attempts to break convincingly through the $7 mark, each of which has failed so far. However, each attempt to break through $7 takes us one step closer to a break above $7 and higher levels from there.

The Company filed its application for a NASDAQ listing over 90 days ago, which means the application process may be close to maturing. While there are no guarantees that it will be approved, most professionals in the micro cap arena will agree that a jump from the OTC Bulletin Board to the NASDAQ can easily equate to a double in the stock price.

We can look back at the trading history of NetSol International for some evidence. We originally profiled NetSol at $3.81 on January 15, 1999 on the OTC Bulletin Board. The stock was under $2 in May 0f 1999, and then found its way to a high of about $8 in November of that same year.

They obtained their NASDAQ listing in the 4th quarter of 1999, and then the stock rocketed from about $8 to a high of $75 in five months. Once the NASDAQ listing was obtained institutional investors got aggressive in accumulating the stock, and the resulting profits to our members were quite prolific. For confirmation on the benefit to members of the OTC Journal, simply click on the Testimonial Button on our home page. Click here if you wish to visit it directly.

It is not our intention to predict that Blue Zone will mimic the pattern of NetSol if the NASDAQ listing is eventually granted. However, Blue Zone could be nearing the end of that application process, both companies are software development companies, and Blue Zone shares technically appear to be under accumulation and due for some sort of breakout.

If you are a new member and not familiar with Blue Zone, please visit the archive section of our Web Site and read about the company. You can either click the Archive button on our home page, or Click Here to be taken directly to it. Take some time to read back through the previous editions on the company. Also, the very first article is at the bottom of the page. This is the original profile. It is worth having another look at.

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF THE EDITORS OF OTCjournal.com.

We encourage our readers to invest carefully and read the investor information available at the web sites of  the Securities and Exchange Commission ("SEC") at http://www.sec.gov and/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com.   We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at  http://www.sec.gov/consumer/cyberfr.htm.   Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site.