Trading 101: Luxeyard (LUXR) Reviewed

Trading 101

Want to be smart about making a lot of money in low priced stocks? Actually, this philosophy works well for all stocks. The key is to be willing to invest when stocks are under followed, then be a seller when everyone is piling in.

Today’s trading 101 lesson is a perfect demonstration of how well this style can work. The recent example is our giant win with current idea Luxeyard (OTC BB: LUXR). On April 12th- just 16 days ago, I published my first edition on Flash Sale Site company Luxeyard- this is the future of retailing. I stated I believed the stock was 50% undervalued based on the recent valuations VCs have awarded to like companies through investments.

The market rapidly became aware of LUXR, and the stock has been trading just gang busters of late. Since it was $.80 at the time of introduction, if it was 50% undervalued at $.80, it would follow the stock would be fully valued at $1.20. The stock has since seen a high of $1.60.

After running to $1.25 in short order, I revealed I had been a seller of part of my position about that $1.20 level on the first run. After all- $1.20 was my fully valued number. When the stock pulled back as you can see in the chart, I suggested there was a “mulligan” for those who missed the first big move in my April 19th edition.

This past week has been huge for this stock, and I took advantage of the opportunity to further lighten up on my position. This is Trading 101. When you see big surging bars for both volume and price, it’s generally a good time to lock in some profits.

I was once again a seller of part of my position earlier this week when the stock traded up over $1.50. LUXR has so far been a good candidate for trading as it has been extremely volatile- both up and down. This past week there were a couple of huge spikes up accompanied by big volume. Those are the days you want to lighten up your position.

Note the stock fell back the last couple of days on much lighter volume, suggesting another volume surge would take it back up rather easily. There’s fewer sellers than buyers, but if the volume bars surge as the stock pulls back, my view could change.

At this point, I’m a buyer if it pulls back much farther, and a seller if it surges again with high volume bars.

That’s Trading 101 for today. Big Volume and Price bars on a chart like this should suggest to you to lighten up. Low volume retractions are a chance to add to your position. I remind the readers I am an investor in both free trading and restricted share of LUXR with my own capital.

One Step Ahead

So, if you’re going to be a successful penny stock investor, you have to be one step ahead of the market, and accumulate when no one is watching. You have to like the company, you have understand the chart, and it helps to be a little lucky timing wise.

There are two stocks in my coverage universe that I believe are likely to deliver major fundamental developments- the kind that sends the stocks running up the charts.

Those two stocks are Plandai Biotech (PLPL- March 26th Edition) , and Nuvilex (NVLX- March 19th Edition). I’m committed to covering both of those companies for six months as I see both of them having very significant upside in those time frames, and want to give everyone the maximum opportunity to profit handsomely from both of these ideas if they work out.

In my last edition on April 24th, I suggested PLPL had gotten quiet enough to jump in- sure enough, this past week the stock surged from $.20 to $.29 before giving ground of only 1 crummy penny. See how this works? I’m expecting PLPL to deliver in a much bigger way when it completes the promised $13 million financing from the South African government to begin the process of delivering it’s miraculous version of Green Tea Extract.

My other longer term following is Nuvilex (NVLX)- the company that has Encapsulation Technology for drug therapies proven to enhance the ability of drug therapies. Clinical trials done in Germany about 5 years ago on Pancreatic Cancer patients yielded remarkable results.

NVLX is now gearing up to take it’s unique therapy systems back into a clinical environment and move the process of eventual commercialization one more step. Capital is needed. Stand by for developments and more upside on the stock.

This little $.07 stock offers a ton of upside from this super cheap level. It popped from $.05 this past week, and it’s just a development or two from finding $.25 in my view.

I plan to be talking about NVLX Monday morning on the BigBizShow at about 12:30 Eastern, 9:30 Pacific. Tune in if you want to learn more about the company. Here’s how you can view the show:

Catch Me Live

Catch me LIVE!! on TV every Monday from 12 to 2PM eastern on the BigBizShow. The show broadcasts on several hundred radio shows live, is syndicated to over 30 milion cable homes, and is broadcast on the Armed Forces Radio Network in 79 countries.

Simply go to www.bigbizshow.com, and click on the Watch Us Livebutton. I’m the guest host on the show every Monday.

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Where Are VCs Clamoring To Invest? VRNG Near New High

Where Are VCs Clamoring to Invest?

There’s a new, red hot sector in internet investing, and the Silicon Valley venture capital firms are just flinging money in this direction even faster than Ben Bernake prints the stuff up at the Federal Reserve. Believe me- that’s fast.

Here’s a few eye opening facts:

  • Amazon (NASDAQ: AMZN) bought a company in this sector for $110 million in 2010
  • Nordstrom (NASDAQ: NOBE) bought one for $270 million in 2011
  • American Express (NYSE: AXP) did a 50/50 joint venture valued at $3 billion in May of 2011
  • $70 million just went to one competitor in the sector for under 10% of the company.

Have I got your attention? Here’s more…..

Flash Sales: The New Gold Rush of Silicon Valley

Flash sale sites are the new Gold Rush of Silicon Valley- a place that has seen more than its fair share of gold rushes over the years. Flash sale sites are borne out of the 2008 recession.

When the US was facing a complete financial collapse three years ago, manufacturers and retailers found themselves in the precarious position of having too much inventory laying stagnant in their warehouses and on their shelves.

Retailers can have special sales, but their brick and mortar customer bases are limited to the immediate area. Manufacturers can offer big discounts to retailers- but again- you are limited by the brick and mortar proximity.

eCommerce pioneers came up with the brilliant idea of a Flash Site, and here are the main components:

  • Build a user of base of 1 million plus consumers who are highly motivated by deep discounts on merchandise.
  • Negotiate a very deep discount “bulk” purchase from a manufacturer of some sort of excess inventory.
  • Offer the product to your subscriber base by passing on these huge discounts for a limited time- while the supply of inventory lasts.
  • Move mountains of merchandise in a limited time, thereby freeing up badly needed capital trapped in the manufacturer’s excess inventory.

Needless to say- you have to find products consumers want at a deep discount, and have the registered user base to move the merchandise.

As I stated above, the Silicon Valley VCs are just throwing money in the direction of these companies. Here’s more examples:

  • Gilt Group was recently valued at $1 billion based on an investment made by Goldman Sachs, Pinnacle Ventures, Matrix Partners. Gilt is expected to do an IPO in late 2012.
  • Zulily received $43 million in VC funding last August from Meritech Capital Partners
  • iDeeli just raised $70 million from Kodiak Ventures, Constellation Ventures, and Starvest for just under 10% of the company.
  • OneKingsLane was valued at $440 million in a recent investment by Kleiner Perkins.
  • Fab.com received a capital injection of $40 million from AndresenHorowitz this past December. The financing valued this total start up at $200 million.

So, where is all this fantastic information leading? Glad you asked, because I happen to have the answer.

Believe it or not, there is only one public company in the Flash Sale business, and as compared to the money raised by the names you see listed above and the valuations, this stock is very undervalued.

I’m also personally an investor in this company. I own both free trading shares I’ve purchased, and restricted shares I’ve purchased when I helped finance this company’s growth.

In light of the explosion of interest in the sector, I’m very optimistic about the opportunity to notch some major profits in the near term.

I’ll be introducing the company to you on Thursday- remember- it’s the only Flash Sale Site public company you can participate in today.

Stand by for the 411…. I’ll have all the information, and then you can make your own informed decision.

Vringo (AMEX: VRNG) Trying For New Highs

In case you’re following huge OTC Journal win VRNG (introduced last year at $1.20- now $3.37- the stock has been trying for another new high the last couple of days on some very positive developments.

It’s traded over 1/2 million shares today, down from over 1 million shares yesterday.

The surge in the stock is being fueled by a research report out of Five Star Equities, citing the significant opportunities in the growth of the 4G LTE networks as being significant fuel for companies with services in the sector.

Five Star forecasts LTE Phone shipments will grow 10 fold in 2012, from 6.8 million units in 2011 to 67 million in 2012 globally.

Two companies mentioned in the report that should benefit greatly from the growth of 4G LTE networks and handsets are Zynga (NASDAQ: ZNGA), and Vringo (NYSE: VRNG).

If this company continues receiving this kind of positive press, breakouts to new highs are inevitable.

If the stock pulls back to the $3.15 level, that would be a good time to accumulate. If it softens more and holds $2.50, that would be a great time to pile in with a full position and a tight stop. I would not hesitate to suggest jumping into this one if and when it pulls back to that level.

This stock has gone from quiet and under followed to “In Play”. Several analysts and writers have picked up on the story, and I suspect there’s more to come.

Use a pullback to get positioned.

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