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Comments in the BLOG

Today was the day. In my view, today was capitulation day for both the markets and for my favorite company, Spicy Pickle. The stop and reverse in that stock today was absolutely picture perfect. It has been trading down of late as all the buyers who bought it because it was going up have been sellers as it has been going down. I know a lot of you have been looking for a lower risk entry point in the stock- I believe today might have been the day. Read today's BLOG for my thoughts. Now, you have a lower risk entry point. If you've taken partial or full profits, time to take another look. Time to step back up to the buffet for second helping of profits.

The BLOG is your opportunity to ask questions and offer comments. I will make an effort to answer every legitimate question. If I don't know the answer, I will contact the management and get the answer. Alternatively, if you have questions you don't want publicly displayed, you can always email me directly at editor@otcjournal.com.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG scrolls down from the upper right hand corner. The most current journal entries appear on the right hand side of you screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels in volatile markets.
 

TraceGuard Systems (OTC BB: TCGD): Now You Know Why

TraceGuard, which was a bit problematic out of the gates thanks to lousy timing on the trading side, has turned around in the last couple of days, bucking the free fall in the market. We're nearly back to where we started in the $.90 to $.95 range, and could move into the black tomorrow based on today's post close news. 

A got a few emails from disciples wondering why I would be covering a pre-revenue company like TCGD. Sometimes I hear stories from management and they deliver the goods. Sometimes they don't.

TCGD has already delivered on one of their promises to me, which leads me to believe there could be more to come. Those of you who read the original presentation know TCGD has developed a machine to replace those swabs tests you see used at the TSA Security checkpoints in our airports. It takes 45 seconds from start to finish for this machine to check your briefcase for explosives or toxic chemicals- a huge time and efficiency savings. They have now proven it works at Tel Aviv's Ben Gurion airport- widely considered the most secure airport in the world.

Today, post close, TCGD announced it has entered into a Letter of Intent with Smiths Detection. According to the press release, Smiths Detection will be working towards a definitive marketing agreement to get TCGD's products in front of aviation and homeland security customers.

Two issues- first, who is Smiths Detection?, and secondly- is a Letter of Intent worth acting on, as it is not a binding contract- yet.

First- who is Smiths Detection? You might not know the name as it is not a household name in the US, but it is in the United Kingdom. Smiths Detection is the second largest company in the world in the homeland security and terrorist detection space. It is second only to General Electric.

Pictured here is a typical airport terminal, and Smiths Detection makes products that go everywhere you see the orange dots. Security checkpoints, cargo, video surveillance: you name it, they do it.

They are #2 in the world. I looked up their numbers- they delivered 437 million pounds in revenues in homeland security sales in fiscal 2007 which ended at the end of July. I'm not sure how pounds translate to dollars these days, but I'm sure they would rather be paid by the TSA in pounds.

How about the Letter of Intent? LOIs are not binding contracts, so there is another step to go. However, the press release states that Smiths will first help them get their current machines to market, then look at integrating their unique explosive detection technology into existing Smith detection systems- i.e. the conveyor belt/x-ray machines your carry on bags and shoes through. Smiths makes a lot of the ones you see in airports.

Since it's not a binding contract yet, there is still an element of risk that it might not come to fruition. That's the nature of risk. You step in an own the stock before it is proven. Then, once it is proven out, someone who is more risk averse is willing to buy your stock at a higher price.

I realized this would probably be a longer term idea as it is a pre revenue company. The stock sold off on us out of the gates, but in the past week has been rebounding quite nicely, as no doubt word was starting to circulate about their pending partnership with Smith Detection, one of the behemoths in the industry.

Today's announcement makes the stock less risky. A marketing partnership positions TCGD to deliver growth much sooner than originally anticipated. If anyone can get their product approved for sale to the TSA and the Israeli version of the TSA is pretty short order, it's Smiths Detection.

Here's the absolute bottom line on this one. Sometime next year, you could be going through security at a US Airport, and they could put your briefcase in a TCGD detection machine, which will take 45 seconds of your time. If it happens that way, it will be too late to own the stock for the big gains. They will already have been notched by investors at today's levels.

Now you know why I'm covering this one. It's the real deal in new airport security technology, and a myriad of other future applications.

Here is today's press release for your review:
 

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