To OTC Journal Members:
 

How Ugly Can Work For You in Earnings Season

This market environment is giving me flashbacks of the Post 911/Dot Bomb meltdown era. It is simply an ugly Bear Market, and with each successive trading day it just seems to get uglier. 

If you are long any stocks today, you simply need to have a long term perspective. Everything I cover has further downside risk in today's environment. There are simply no buyers around, and as investors see stocks trade down to levels they can no longer stomach, small sell side trades lead to eroding values against a backdrop of a complete buyers strike.

I've been counseling all investors to decide if you want to hold your stocks for through this down cycle and re evaluate when conditions improve. Indeed- consider carefully- do you have a long term mentality and the ability to not worry too much about today's quote? If so, hang in there on the stories you like. If not, get out, and wait it out. This won't last forever, and there will be some easy money to be made in the first surge when conditions improve. Micros will trade up as if in a vacuum. I just can't say when it will happen, and how low we will go before it does.

In the meantime, I suspect most of the microcap audience hasn't been paying attention to some of the short term trading ideas I have provided in this market meltdown. For speculators, there is always somewhere profits can be had, and with the micro side dead for the time being, I have turned my attention to short term trades.

Here's a table of the trades I have published since Mid May. These are the actual trades I have executed in my own account:
 

This all adds up to a net profit of $7798.54 net including commissions and trade fees. These are all trades I published in the BLOG which you could have participated in as well. 

So, despite the market driven carnage in microcap land, there are trades to be had. Of course, for those of you who have been following my suggestion to participate in QID, that's my major regret. I chose to liquidate that position out in front of my vacation as I couldn't monitor the market. Needless to say, QID went directly to my target price of $45 to $46, and I left about $10,000 on the table. That was one expensive vacation. I hope some of you took advantage of the idea and made some money.

Now, on to an idea about how to make some money in the coming earnings season.
 

Have you ever watched a stock get absolutely decimated after an earnings release? It's a pattern that repeats itself, and is likely to be exacerbated over the next several weeks in this hair trigger market environment.

When companies disappoint the market with even the slightest miss, the market ruthlessly opens the stocks much lower, and they often drop from there. Wall Street flushes them down the toilet in one fell swoop. Consider Research in Motion (NASDAQ: RIMM)- the manufacturer of the Blackberry. A couple of weeks ago the company missed its Wall Street earnings estimate my a whisker- the stock shed nearly 20 points almost instantaneously.

As we move into earnings season, I believe the current market environment could lead to some huge gains with companies that disappoint if you get on the short side, particularly if the stocks run up into the earnings report.

Below is a table I plan to use going into earnings season. I plan to look for stocks that run up a little into their earnings releases, and take a short position of buy a put option before they release numbers. I believe it is very important that the stocks run up a little into their earnings releases. This will set the stocks up for a better chance of a pullback. Even on good numbers, speculators could be taking profits and running stocks down. I've come up with 20 names to monitor over the next 10 days.
 

If you're interested in following these trading ideas, check the BLOG everyday just after the market closes. I'll provide a recap of what I am doing with my own capital, and try to notch some big profits.

The OTC Journal is all about making money in the speculative end of your portfolio. Anyone with a feeling for market cycles knows there are times when the environment makes it nearly impossible to profit on small stocks. We are in one of those times right now. 

However, as long as stocks are moving, there are ways to make money. I only plan to risk small amounts on these trades when they set up properly. This is an experiment. I'm adjusting my thinking to the market environment. 

Keep an eye on the BLOG everyday for trading ideas. I'll track them, and see how they come out. This could be a profitable course to pursue, especially if you catch a couple of trades for 10 to 20 point gains.

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