To OTC Journal Members:
 

Tony Soprano Says "Forget About It"

Want short term trading ideas that could be profitable?- In the words of Tony Soprano: FORGET ABOUT IT, at least for the next few weeks. The market is stuck in a range, and it is unlikely to break one way or the other in the immediate future. However, when it does break, it will break in a big way. We're not sure whether it will break up or down, but you should be prepared to do the opposite of the what the market is doing when it happens.

Two widely used technical indicators are the 50 day and 200 day moving averages. The 50 day moving average is considering a good short term indicator of market momentum. The 200 day is considered a good long term indicator. The chart shows the 50 day in yellow, and the 200 day in red. As you can see, the NASDAQ composite is now above both lines, indicating we are probably in a short and long term uptrend. The same charts of the S&P 500 and the DOW would show both indexes stuck between the 50 day and 200 day moving averages, indicating we are trapped in a range.

The bullish camp would point out the NASDAQ has not been above its 200 day moving average for any length of time in over a year. Bears would point out the other two major indexes have not confirmed a long term uptrend, and therefore we are likely to pullback. We would argue the convergence of these lines signifies a consolidation period, and we will soon break hard one way or the other.

Indeed, it is a tough market to make money with short term trades. January's limited uptrend is mostly the result of short covering. Very few Wall Street Professionals are willing to place bets. Here's what the odds makers are saying about the current market as it relates to war with Iraq:

• Buy stocks if you don't think there is going to be a war, and oil prices will eventually go down.
• Sell or short stocks if you think there is going to be a war, and it will be a long, drawn out Viet Nam type conflict.
• Get ready to buy stocks after the war begins, and it will be a brief affair like the 1990 Gulf War.

We believe waiting is the prudent thing to do. The daily news is filled with stories about Hans Blix's UN Weapons inspectors making progress. UN Secretary General Kofi Annan is asking for more time to complete inspections. President Bush is getting impatient and demanding disarmament. North Korea has the bomb one day, and the next day they were just posturing for negotiating leverage. We're all confused.

January 27th seems to be setting up as the day of reckoning. This is the date Blix's inspectors must file their first formal report to the UN, and Bush will get his first look at their findings. We believe if the report does not reveal the discovery of the weapons we believe they already have, there will be an invasion.

The war discount was priced into the market in December. Our advice: If and when the war starts, be prepared to do the opposite of what the market does. If the market climbs in anticipation of a short lived affair, get ready to sell or go short.

If the market drops along with the bombs over Baghdad, get ready to go long. The market's knee jerk reaction to the geopolitical event will be a head fake, and the real money will be made by taking advantage of that move.

We'll have some trading ideas for you when it all happens. In the meantime, 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.

Also, remember the big picture. For two years the market went straight down. For the past six months the market has gone sideways. The simple laws of physics suggest a falling object must stop descending and level off before it can turn back up.

Here is one microcap we cover in the news which has been quiet for a long time and is at the low end of its trading range. It's a great speculation at $.14. Now would be a good time to accumulate.
 

XML Global (OTC BB: XMLG) Announces New Product Introduction

XML Global is hoping to capitalize on its unique relationship with Sun Microsystems throughout 2003. The company develops software tools which allow massive computing legacy systems to communicate with each other efficiently without enormous cost. They are one of the few companies with a joint marketing agreement with Sun Microsystems. Sun needs to offer low cost upgrade alternatives to existing customers to remain competitive.

Corporations are spending much less on computer upgrades, but nevertheless need to keep their systems current. XML Global provides low cost software solutions which allow major companies to achieve this. XML (xtensible markup language) is the programming language which acts as a universal translator to allow massive computer systems to communicate with each other.

Sales are improving over 2002 levels, albeit very slowly in step with the entire industry. Against all odds, this company has survived the downturn in IT spending, and is poised to grow.

Today, just after the market closed, XML Global announced a new product introduction which the industry has been demanding. Look for future news releases to focus on enhanced sales. This stock has been very quiet for some time, and is in the low end of its trading range. This would be a good stock to accumulate for a surge on sales related news in the future. Please use a limit order. Nothing is going straight up in this market.

Here is the complete text of the news release for your review:
 

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MarketByte LLC has been paid the following fee by XML Global for a year of representation extending from February 2, 2001 to February 2, 2002: $100,000 cash, 60,000 shares of free trading stock, 60,000 shares of restricted stock which are now free trading, and 60,000 options exercisable at $2. The 60,000 shares of free trading stock have been contributed by a third party on behalf of the company. MarketByte's contract to represent the company expired February 2, 2002. The contract was renewed for another year, and XML Global has paid compensation of $20,000 in cash and one million shares of newly issued restricted common stock. Please review our policy on selling shares found in our Mission Statement on our home page.

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