Well, I hate to say it, but technically CPNE is a complete disaster, and this week’s action has swept away any vestiges of hope for a support level to appear. In short, I am now convinced it is impossible to call the bottom on this stock. In my view, this stock will continue to go down until it starts going up- and goes up, closing at higher levels, for a week or two in a row.

Here’s today’s chart:

The last level of technical resistance was $1.44. This is a pretty long term chart, measuring the performance of the stock week by week- not day by day.

The stock has fallen below the very long term weekly 61.8% retracement level, which means there is no end in sight to the fall off. Had the stock held in this area, it could have been a great inflection point for turning back up.

Fundamentally, I have no indication the company is not moving along nicely. Technically, I will no longer even attempt to guess where the bottom is.

If you have recently bought somewhere in here, I would just go ahead and sell it for a small loss, and wait for the bottom.

If you are holding it from higher levels, you have to decide if you want to hold your nose through the technical stench, and hope the company hasn’t fallen on undisclosed hard times, or just go ahead and sell. It’s your money, so the choice is yours. As I have stated, I have no indication the company is doing poorly.

If you’re looking for a culprit to explain the dramatic drop in the stock, a good guess is eFund. There are two main sellers in the recent registration statement- fund manager Jeffrey Feinberg is registering about 2 mllion shares, and eFund is registering about 7 million. Here’s the big difference- Feinberg has a cost basis of $1.90, eFund has a cost basically zero- they just helped put the company together over three years ago. My guess, eFund has figured out a way to pre-sell against their registered shares.
This is just a guess, but they are the only ones out there with enough size to hurt the market this badly and a low enough cost basis to make it pay off for them. Until there are some SEC filings from them, we won’t know.

In summary- I would not open new positions at this time until it is clear the stock has bottomed out. You have to decide what to do with your current position- the choice is yours. Only hold it if you are long term and aren’t going to watch the quote every day. I have no indication there is anything wrong at the company.

Sad, after this stock was so good to us for nine months, but that’s the stock market. I could have published a note saying the stock was even a better buy at these levels, but you read this content because I tell it like it is.

Comments, questions, and general complaints are welcome as always.

CPNE is falling apart again today, and I just don’t know why investors would sell this stock at this price.

Actually, I do know. They are selling it because it is going down. Despite profit levels that suggest a $4 stock, institutional participation at the $9 million level at $1.90, and all the balance sheet improvements, CPNE is still under heavy distribution.

We are now flirting with my SSL level of $1.45- so once again, as is typical of the late spring and early summer, it is time to decide if you want to be a seller and move on, or become a long term investor.

I have watched about $100,000 in value erode of our corporate portfolio in the last few weeks, and a lot more from the January high of $3.43. Despite 20 years of grizzled veteran experience, stocks like this wear me out as much as anyone. In fact, this is far worse than a failed idea. It’s worse because the company succeeded- it’s simply a bad stock. When the companies fail you just sell and move on. No problem. It’s over. However, bad stocks can become good stocks a lot easier than bad companies can become good companies. We have every chance of heading in the right direction again.

I was talking with a good technician today who has been watching this one. He told me he was going to be a buyer today. He likes 61.8% retracements as I do, and he pointed out something I hadn’t caught.

Here’s today’s chart:

This is not a daily chart. It is a weekly chart going back to the stock’s all time low in December of ‘05. CPNE traded to an all time low of $.16.

On a weekly basis, the stock has now given back almost exactly 61.8% of its entire gain from top to bottom. This is a pretty long term look, and the longer term, the more powerful and better predictor.

Also of note is the stock’s miserable perfomance over the last six weeks. Five of the last six weeks (as measured by the colored bars) have been down. That’s just abysmal.

Just as I suggested with TTGL a couple of weeks ago, you need to decide if you are long term and want to hold, or simply sell and move on. If you sell, you can always buy it back.

If you have decided to sell and move on, I would wait for a modest rebound. It’s hard to get a decent print when everyone else is selling.

I would be more inclined to buy right now. When these stocks make new lows they tend to blow everyone out and then reverse course when you least expect it.

I wouldn’t be surprised to see some sort of moderately negative announcement come out of the company, followed by a rally in the stock once everyone realizes the whole thing (whatever it is) has been blown out of proportion.

In the meantime, it has been painful to watch this one fall apart, but that’s the market.

I wonder how low the stock has to go for it to become irresitable to traders. We might be there now.

Comments and questions are welcome.

I spent some time today dissecting the Commerce Planet Q1 financial filing, and it seems like the company is full speed ahead. There are a couple of minor negatives, but on the whole it seems like this stock should be trading in the $4 range, yet it can even get through $2.

Here’s a few highlights I pulled out. First, on the Balance Sheet- which is the part that compares the company’s assets to their liabilities:

• End of ‘06: $3.6 million in cash; March of ‘07: $5.4 million in cash (50% increase in three months)
• End of ‘06: $1.5 million in receivable; March of ‘07: $2 million in receivables (33% increase)
• End of ‘06: $1.9 million in “other receivables”; End of March of ‘07: $3.5 million in “other receivables” (these are some sort of credit card hold back). 84% increase
• End of ‘06: $7.2 million in Shareholders Equity; End of March of ‘07: $10.7 million in Shareholders Equity (48.6% increase in three months).

All in all, on the balance sheet side, it really doesn’t get much better than this. This is truly outstanding performance all across the board, and I really can’t find anything about this performance that doesn’t suggest a much higher value for the company.

Now- let’s look at the Income Statement. This is the part where we see if they are making any money:

• CPNE delivered $13.2 million in revenues, up 50% from Q4 in ‘06. A huge gain.
• Gross profits were $10.6 million- CPNE is delivering 80% gross margins
• Net Income was $4.1 million pre tax, up 33% from last quarter
• Net Profits were $3.6 million

So- now we come to an issue that could be interpreted as a negative. CPNE has run out of loss carry forwards, so they are now paying income taxes. $500k was set aside for taxes in Q1, taking the EPS down from $.10 to $.08.

On the stock buy back program- we can see the hard numbers on their level of commitment now. Nearly 300,000 shares were bought back in Q1- those shares are now retired and removed from the I&O.

On the flip side, the company issued 2.37 million shares to someone the filing describes as an “affiliate”- there is no other description to let us know what this award was all about. In another section it is noted the company issues 237,000 shares for services.

Net result: a 2.6 million share gain in the number of shares I&O. This is a minor negative, and I would like some disclosure on why and to whom they issued 2.37 million shares of stock.

The tax paying status explains why revenues were up 50%, but profits only up 33%. The company will now have to pay taxes on an ongoing basis- kind of a high class problem.

So, in review- here are your negatives- shares I&O, despite the buy back program, went up by 2.6 million.

Revenues went up 50%, while profits only went up 33%- primarily due to paying taxes as the company is out of loss carry forwards.

And, of course the biggest question remains- why does this stock continue to trade at such a lousy valuation relative to corporate performance? I wish I knew. We have already explored that issue in some depth, so I won’t go over it again.

Here’s the chart:

I threw in a couple of other indicators I know investors like- specifically the 50 day and 200 day moving averages.

In addition, I put in the long term 61.8% retracement line I used a couple of months back to suggest the stock was a buy at $1.60.

As you can see, $1.61 remains the long term 61.8% retracement level. The 200 day Moving Average is $1.66, and the 50 day is $1.97. This means the stock is in a long term uptrend, but a short term down trend.

If the stock were to eclipse the $1.97 level- which it tried to do today, it would signal it was in an uptrend both short and long term.

So- there’s the chart, and there’s the review of the financial filings. Fundamentally, it’s a very strong buy for long term investors. Technically, it’s neutral right now. If it gets some steam, the technical picture could change.

Comments and questions are welcome.

I almost hate to say it or think it. Why? because visualizing this stock getting healthy is the surest way to sabotage any move.

However, looking at the chart, there does appear to be a “Stealth Rally” going on in CPNE at this time. Long overdue, but nevertheless here.

As shareholders of CPNE, we are all probably better off investing in a company that makes heart monitors- after all, this stock can give you heart attacks. It is about as volatile as any I can remember, and seems to do the opposite of what you expect.

Let’s review- From the January high of $3.40, the stock simply got clobbered when the market learned about the 4.5 million shares fund manager Jeffrey Feinberg bought directly from insiders at $1.90. Those shares are now in registration, and Feinberg couldn’t sell them even if he wanted to.

In its usual fashion, the stock over reacted and sold off to the $1.50 level, before beginning a rebound phase.

Here’s a look at the stock since making its 2007 low. The one day surge up to $2.37 happened when the company pre-announced Q1 earnings results. It was short lived.

The stock then fell back below the 61.8% retracement level, but only for a few trading days. It has since entered a bit of a stealth rally, trying to work its way higher by a couple of pennies everyday.

When I think of CPNE, two adjectives come to mind: Sloppy and Crazy. This stock is both. It seems to want to work its way higher right now.

Here’s the psychology of this stock- the drop to $1.50 simply freaked a lot of investors out. When it rebounded, those shareholders gave a collective sigh of relief and dumped the stock after adjusting their pacemakers out of the heart attack zone.

Now, we have come back to a higher low, and there are less sellers.

I believe the stock will continue to “drift up” for the time being until the real 10Q is filed. I still don’t have the EPS number for Q1. If it’s a big surprise to the upside, the stock will probably get clobbered. If it’s a surprise to the downside, it will probably run up. Who knows?

Here’s what I do know- it was last year about this time when CPNE announced its first break even quarter, and the stock was $.20. It’s been a wild ride since then, but all in all a very profitable one for most of us.

If they continue to deliver the numbers, the year ahead could be as good as the year behind. If you filter out all the noise, the movie is pretty good. You certainly can’t fault the CPNE on the performance side.
I believe CPNE is a buy right now.

Comments and questions are welcome.

Like most of us, you are probably scratching your head concerning the poor performance of CPNE relative to the earnings the company has generated. Last weekend I asked OTC Journal readers to share their beliefs concering CPNE’s inability to get a decent valuation relative to sales and earnings.

I believe there are two major contributing factors to this stock’s failure to reflect a reasonable valuation. First relates to the original capital structure and the market’s perception. I am constantly answering emails related to supply of stock from early financiers who paid next to nothing for their participation in this stock, and even in the $1.80 range are sitting on massive profits. Dutchess and eFund are two names that come up regularly. eFund is by far the more aggressive of the two with the most upside for the least contribution. However, I believe the “existence” of these blocks of stock are more a “perception” issue than a reality issue. Certainly both groups are sitting on huge wins, and both have no doubt been sellers from time to time. Sometimes it happens with early stage investments. They simply work out. Regardless of what they do with their shares, it has nothing to do with the company’s sales and earnings- they are there, and the stock deserves to be higher. They are no different than early stage VC money in higher profile companies.

The second, and I believe the more oppressive issue, is the company’s refusal to provide dialog and information to investors concerning their ongoing operations. There are no analysts following the company, so we have no formal projections. They used to provide a monthly update on new subscriber levels, but have abandoned that practice. Investors are assuming the worst. They have never published any data on subscriber retention, which the market needs to see if they are ever going to get a decent valuation.

Enough from me. Here are some of the more succinct comments from readers:

Comment 1:

First, many thanks for your perceptive and informative otc newsletter. Among the constant flood of unsollicited market letters one receives yours is without doubt the least pompous the most honest and also the most useful. Again, thank you.

Now with regard to cpne, I noticed your suspicion of conspiracy expressed in your bulletin of the 7/04. Friday’s market action appeared to be either panic selling or crude manipulation, possibly by a syndicate of market makers. I believe they are six of those but it would be interesting to investigate the way the market is set in OB securities, is it independent open outcry, electronic, a combination of both and also by which firms/individuals. I followed the market action closely on Friday and noticed that, certainly towards the close, blocks of 9 - 10000 shares would be systematically sold “at the market” thereby triggering the plunge in the price. Clearly, no genuine holder of this stock would place “at the market orders” save in exceptional circumstances and certainly not when the stock is trading down some 15% from it’s intraday high, furthermore on the heels of excellent news on the cy’s fundamentals.

As to these fundamentals, I believe the market, and certainly me, have difficulty in fully understanding the company’s business plan, it’s core activities and the source of it’s income and growth. The numbers appear to be brilliant, but who are the clients, what makes cpne special, where will the growth come from, who are their competitors and how attractive is the cy as a takeover candidate. Should this be a possibilty it would instantly kill all kinds of conspiracy/manipulation and the stock would trade at some premium to it’s value based on fundamentals.

In summary it looks like cpne’ s management is genuinly concerned about it’s stock price and shareholders. They are evidently making an effort to explain their business and strategy but have so far failed to attract any following on the street. How about getting Chairman Mario on board….

Comment 2:

I have two basic questions that could help satisify the issue of stock price.

As a business model of attracting subscribers and cross selling, we know they have been successful in attracting subscribers. The question then arises what about the retention rate? After we know the retention rate then how about the ratio of cross sell.

As an investor, the question I try to answer is the value of the company. Without the retention rate and cross sell ratio, which in my opinion should be addressed in any corporate report. This in my mind would allow us to project the future value and there by the stock price. Without that information one of the best methods is book value (so keep piling on the cash). If their competition is Amazom.com then we need to know this information if we are to belive the stock price can skyrocket to a PE miltiple of 100.

In my opinion, the stock price may be where it is because we know what the company has done not what its projected success may be in the future.

On the positive note, I cannot believe that a sophisticated investor would invest $9.1M without knowing that information.

Comment 3:

I think the market is still wary of this stock. The reason I believe this is true, and why I am wary, is because they refuse to reveal their re-up numbers. I suspect they are getting good sales and then they don’t get a further sale. This would argue that there is a serious flaw in their business model, or in its execution, that would be revealed if they gave their re-up numbers compared to new customers. Thus, it may be believed that they can’t keep up this growth rate because folks don’t continue to buy their service. There are a finite number of companies out there to use their service once, and then not again. It is as if Starbucks or WalMart refused to reveal their same store sales (stores open more than 13 months). It would be assumed they had something to hide and their stock would be pounded down. That is what I believe is going on. It might not make for a good trading stock any more because of that suspicion—until they reveal what is really going on.

Comment 4:

I believe that CPNE may be a victim of its own success. With record revenues and lots of cash on hand it has attracted a few sharks with lots of money to play this stock both up and down simply because the risk of CPNE going out of business is almost non existent. Quarterly reports are predictible events, you know when they will happen and if you know that the numbers will be strong you have a good idea what most traders will do. And if you have the resources you buy very early and very quietly. When the stock starts to move prior to the event you begin to sell slowly and as it approaches the event you sell more and more of your position. What ever you have left you sell off even if it is at less than you bought it for because you already made your money. The panic starts the downhill slide and soon the market is selling off on fear. These traders ever sell short to increase the downhill slide. Then they wait for the next quarterly event. TTGL is also experiencing ithe same tactics as well as PNWIF seems to be suffering the same fate. This prevents confidence from building within the stock keeping CPNE and TTGL volatile which is exactly where they like it.

There’s a few of the emails and comments I received, and there are some perceptive viewpoints contained within.

Many thanks to contributors.

As usual, comments and questions are welcome.

The Planet offered up some preliminary Q1 numbers post close today, and I’m guessing the results are going to allay investor fears and shift the focus again on how undervalued this situation continues to be.

CPNE disclosed it will deliver $13 million in revs in Q1. Until I see the actual financial statement, I can’t really comment on whether it is a strong number- remember, they have subsidiaries that do business with each other, so I’ll have to see the treatment to comment. Also, the revenue mix of their three subsidiaries will be important- Are the other two divisions growing? or are the majority of the revenues still coming from subscriptions? Investors would probably like to see some growth in the other two divisions.

Revenues aside, profits are profits- and with this company profits are cash. The bottom line- they made $4.6 million in cash, and will be able to report $4.1 million in profits after $500k in non-cash expenses. These guys are generating $1.5 million per month in excess cash flow. Outstanding.

Here’s another mystery- I don’t know how many shares will be I&O when they report. Some will be gone from the last financials they have bought back $1 million worth of stock as of the last disclosure.

They could have added stock or warrants with the new advisory relationships they have. I’m guessing the EPS will come in around $.10. If they can just keep up the pace, they will end up with $.40 per share in earnings this year.

On one issue there can be no doubt- CPNE has proven itself for another quarter, now making it five in a row. I wonder when investors are going to start doubting the company and just buy the stock.

It will be interesting to see what happens tomorrow to the price. On the basis of corporate performance, there is really no reason to sell the stock, and lots of reasons to buy. That’s what makes sense. As we know, the market doesn’t always make sense.

To Mike Hill and all the guys: Keep up the great work- outstanding performance again. Let’s hope the market gets its head out of its proverbial hind end and prices this one where it belongs.

Comments and questions are welcome.

PS- I’ll bet when they file the actual 10Q, the numbers come out even better than preliminary results.

Commerce Planet is behaving like the Planet Krypton- simply imploding- price wise. The stock is trading as if something has gone wrong at the company.

You can blame a certain amount on the current buyers strike thanks to the over all market conditions, but there comes a point where you have to start questioning the company’s future.

Is the market a Jar-El (Superman’s Dad on Krypton; is that the right spelling?)- warning everyone an astroid is going to destroy the planet, and no one believes?

I can’t say and don’t know for sure that something hasn’t become derailed after three quarters of outstanding performance and profitability. There have been doubters in this stock before, and so far they have been proven wrong.

It would be helpful if the company were to put out some guidance relating to subscriber numbers or some other metric to soothe the market’s fears. Right now, I believe the stock is going down because it is going down, and people are selling it because it is going down. I don’t have any indication the company’s business is floundering.

Some have pointed to the lower traffic rankings on Alexa. As I understand it, Alexa traffic is only ranked by the few who have an Alexa toolbar installed on their browser- I believe it is a very small percentage.

My SSL at $2.25 turned out to be a technically good call. However, suggesting a buy back in the $2 range about 10 days later has since turned out to be a bad call. It’s not the first time, and it certainly won’t be the last. I picked up 15,000 shares at about $2.23 for my personal account, and I’m still holding 12,500 of them, in addition to the roughly 200k in the corporate account. I’ve been holding those for over 3 years, and haven’t sold any in the last couple of weeks.

If the company’s business is floundering a bit, it is not going to disintegrate overnight. I believe we are due for a bounce, and it should be in conjunction with Q3 numbers.

I wasn’t terribly surprised to see the stock down at $1.90- after all, that is the price the fund manager paid for the huge block he bought recently. However, the move below $1.90 has taken me aback just a little.

Thinking back over the history of this idea, volatility has always been part of the story. Remember the Q3 numbers release? The numbers were great, the stock was trading at $1.80 the day before, and within three trading days it hit $1. Three and a half months later it was printing at $3.25- more than a triple off the low.

In my view this is simply a very sloppy stock right now. Some numbers should tighten things up, and a rebound is inevitable- it’s simply a case of when and at what level.

So, is the stock a buy right now? Is it a sell? Is the market telling us the company has turned south. As always, I will just look at the chart.

The 61.8% retracement still applies- we just have to look at it over a longer term. So, let’s go back to the level from which this company made its meteoric run starting last August at $.50. Here’s the chart:

The 61.8% retracement of the entire move takes us to $1.65. At the rate the stock is dropping, it could get to $1.65 tomorrow or Monday.

I believe this would be the ideal level to buy this stock. I can’t say for certain it will get this low, but if it does, that would be a very low risk entry point in a highly volatile stock.

If it ends up there and you jump in, your SSL will become about $1.48.

The longer term the chart, the better predictor of the possibilities.

Comments and questions are welcome.

Earlier today I published the BLOG you see below. Late in the day I learned CPNE filed a registration statement relative to the well publicized transactions of block purchases made in February.

Investors may interpret today’s filing negatively, but it really isn’t. It changes nothing about this stock, and fulfills the company’s commitment as specified in the February 13th news release concerning the institutional buyers who bought blocks at $1.90. If you want to know who they are, just read the selling shareholders list in the prospectus. Jeff Feinberg of JLF Partners is considered a top hedge fund manager. I am going to take the liberty of assuming Feinberg did not buy this stock at $1.90 to sell it at $2.10.

Nearly all the other shares contained in this registration statement were eligible to be free trading under Rule 144, 144k, or some other exemption with the normal restrictions on officers and directors.

You can also see the exact number of shares each of the insiders sold to the funds. Better to have the funds buy it at $1.90 than have it hit the open market. It raises the cost basis.

If the sells off at the open on Monday, hold off on any purchases. If it doesn’t, the BLOG below applies. It might sell off a little early, then come right back.

________________________________________________________________________
Technically, Commerce Planet became a bit of a mess over the past two weeks, and now it’s time to start looking at the possibilities.

First and foremost- you probably want me to comment on why the stock dropped so far and so fast. First let me remind everyone that this stock has a history of volatility. For those of you who have been following the situation since I pounded the table at $.50 last summer, you have seen this stock make wild swings. It’s almost becoming the norm.

I believe there are several reasons the stock has been so sloppy- 1.- the market climate- the big correction flipped off the “microcap switch”, and buyers are now in hiding. 2.- Recent 144 filings- old shareholders has recently filed to sell a bunch of stock- I don’t believe they are all sellers, but I do believe their filings precipitated a binge of selling. These folks are reasonably close to the company, and they know how well CPNE is doing.

So- the big sell off panicked others into selling- no buyers around thanks to the big correction- hence a sub $2 price momentarily.

Also- technically I thought $2.25 was a prudent SSL- so many investors with more of a trading mentality might have exercised some discipline- if you did so, you did the right thing. There was no telling how far it might have dropped.

For the time being, the stock seems to like the $2 level. It has been a big, nasty resetting of the bar, but it was inevitable there would be a correction.

Is this the bottom?- is it time to start accumulating again? I looked at the chart today, and here’s the first technical indicator that jumped up and grabbed me:

Here’s the long term uptrend line going back to the first big break out on Q2 numbers last July. As you can see, the stock came back to its long term uptrend line nearly perfectly. This chart is bullish for accumulating CPNE today.

However, in the back of my mind I can’t get away from the feeling the NASDAQ Comp could have another 140 points to drop before we get really healthy again.

Here’s your worst case scenario chart:

If the uptrend line breaks convincingly, I believe we could see a full 61.8% retracement of the move which began last July at $.50. That move down would take us to the $1.64 level- believe it or not.

Conclusion- I don’t think the stock is going to make another big leg down from its current level. I believe the stock is a very strong buy right now, especially in light of its recent firming on very light volume.

However, if it does break the downtrend line convincingly, look for $1.65 or so.

On the fundamental side, I still believe Q1 is going to be very strong. Beyond Q1 I don’t have much of a feeling.

If you sold CPNE at $2.25 or higher, now would be a great time to jump back in. The stock is stable and drifting up. In addition to extreme volatility, this stock has a history of trading up into earnings releases- the market should start pricing in Q1 right now.

Comments and questions are welcome.

CPNE filed its annual 10k and released its audited year end numbers late yesterday. The market certainly likes the news as the stock is enjoying another upday after the massive three day swoon. If you jumped in earlier this week when I called it, you did yourself a favor here in the early going.

I am more convinced the sell off was not precipitated by 144 sellers actually making sales- it was precipitated by traders seeing the filings, then wholesale dumping the stock - trying to get out ahead of a perceived influx of supply. They were selling stupid. Here’s what they don’t know- those 144 investors are close to the company, and they, like many of us, suspect the company is doing extremely well and remains undervalued.

Here’s what I learned from a quick run through the 10K.

From the end of Q3 to year’s end the number I&O only went down by 100,000- therefore, they didn’t buy back much stock in the open market.

They made almost as much money in Q4 as they had for the entire rest of the year- They generated $4 million in Q4, and were standing at $4.75million up until then for the first three quarters.

Therefore- they are now making $1.25 million per month vs the $1 million they were previously making.

Membership revs for the full year were 81% of sales- 78% for the first three quarters- therefore, there is not much evidence of growth of sales outside of the monthly fees as a percentage of the whole- a minor negative.

EPS was $.09 through the first 9 months- $.20 for the full year. They merely doubled the year’s EPS in Q4. Outstanding. Here’s this past month’s chart:

I don’t mind tooting my horn a bit about the call I made earlier this week. I published an edition with an emphatic buy where you see the circle, and those who jumped in are doing very well. You never know when a low risk opportunity is going to come along.

From here, the larger market will probably grind around for a bit, and perhaps sell off again. This “rebooting” of the market is just what we needed.

I expect this stock to participate in the next market rally, and trade up into the next earnings release- It should do well later in March and in April barring a cataclysmic market. I have said this before, and I will say it again- I have read and heard all the rhetoric coming out of this company, and I believe Q1 will be strong.

If it can match Q4, CPNE could earn $.40 EPS this year. You tell me what the price should be.

Comments and questions are welcome.

It’s gut check time on CPNE right now. The hot money continues to flow out of this stock, and it has fallen another 17% today.

This would be a good opportunity to remind everyone about the past two big sell offs in this stock. When looked back on, they both turned into very strong buying opportunities. I particularly remember when Q3 numbers came out. They were outstanding, and in the aftermath the stock dropped from $1.80 to $1 in two trading days. Look where we are now.

Here’s the chart, and it’s the absolutely perfect low risk retracement if the price holds in the $2.50 range:

Now, if this roughly $2.50 level holds, we should get a sustainable rebound. If we end up down into the $2.25 range, it will technically be a negative. It could signal lower levels ahead for some time.

It the meantime, I am trying to buy back some of the 10,000 shares I sold in the $3.40 range at $2.45- let’s see if I get filled. It is now bid at $2.50. I might have to raise my bid.

If you check the February 9 BLOG- you will see I called it a very strong buy at $2.40. It has cooperated.

If you like this one, and have been looking for an opportunity to pile in, now is the time. As I write, the bid is firming.

Comments and questions are welcome.

CPNE took quite a drubbing today after the company came out with Q4 and full year guidance.

Personally, I believe the sell off is pretty ridiculous, and people are selling in typical knee jerk reaction. Anyone who has been following this stock for the last year along with me knows every time this stock has sold off violently it ended up being a great buying opportunity. The last time the company announced quarterly earnings, the stock dropped from about $1.60 to $1- what a buying opportunity that was.

I was half right in this past Wednesday’s BLOG entry when I predicted this sell off after the numbers came out. I thought the stock would run up higher on Wednesday, and I was wrong there. However, I was completely dead on about the post numbers sell off.

This is an event you can put in your experience file and remember it the next time a similar opportunity comes up. Anytime a stock runs up into an earnings release or some other anticipated event, it is nearly almost always a selling opportunity before the fact. This was no exception.

If you are wondering if this party is over, consider the following: CPNE will deliver $.18 EPS in 2006. Also, consider CPNE delivered zero EPS in Q1 ‘06, and $.03 EPS in Q2 ‘06. Therefore, CPNE delivered $.15 in EPS in the second half of the year.

Even if they move along at the same clip, they will deliver $.30 EPS in 2007. This suggests a much higher priced stock.

Here’s what the market didn’t like. There was $.07 EPS in Q3. Therefore, there must have been $.08 EPS in Q4- not as much growth as we would like. However, we have no idea if there were some non cash charges, and cash levels could have been considerably higher at year’s end.

I have a high level of confidence Q1 ‘07 will be very strong. Someone wrote in it would be $.10- I don’t know where they got that information.

Nevertheless, this sell off is heaven sent for anyone looking to get more involved. Here’s the chart:

This only goes back a few weeks to the sub $2 level. It’s pretty short term. Therefore, thinking short term, I believe this stock is a good buy at $2.875, and a screaming buy at $2.50. New SSL- $2.25. I will update the table on the left hand menu bar of the home page.

I still believe this stock is destined for $4 plus and a NASDAQ listing. This pullback could be shallow and short lived.

Comments and questions are welcome.

CPNE broke out yesterday on nearly a million shares of volume. So much for last week’s little bobble when the company announced major shareholders had sold two blocks to institutions at $1.90. Was it a good move on the company’s part? I believe that debate is over.

Unfortunately, the stock did not give a lot of ground and give investors an irresistible entry point. I believe pull backs are going to be shallow and short lived.

The stock is trading very well into Thursday’s big event- the company plans to issue Q4 guidance. The market clearly anticipates good numbers.

For those with a trading mentality, the current move in the stock could offer an opportunity to take some profits, and look for a more favorable entry point.

The stock seems to have resumed its pattern of trading up late in the day. Clearly, there isn’t a lot of supply.

Over the 20 years I have been trading stocks, certain patterns emerge which are fairly predictable. CPNE is behaving like any other stock where the market anticipates strong earnings. The stock trades very well up to the announcement, then sells off a bit, regard