Yesterday, PNIWF announced the COSTCO service had started. So, why wasn’t this market moving? Simple- because everyone already knew it- no surprise there.

Today, PNWIF announced it had entered into a deal with Kodak to expand online photo processing into Australia. This is news. I didn’t know about it.

One would think this is market moving news, but clearly the audience for this stock is not quite paying attention.

They have been kind of dropping the ball on shareholder awareness. Not much has been coming out of PNWIF of late.

Boys- time to ramp up the information flow. Get this darn stock north of $4, jump to NASDAQ SC, and let’s rock from there.

I don’t have time to provide a chart right now, but comments and questions are welcome. This one could be big winner in the second half of 2008 and well into 2009 and beyond.

This will be the first in a new series of daily blogs with some observations about today’s market action, especially as it applies to the current ideas I have in front of subscribers.

Open LEH Puts:

Well, the trade is working well so far. Earlier today I was up $2k on an $8k investment from last Friday, and tempted to lock in. Gave back $500 so far. However, since LEH was down yesterday on a huge up day in the markets, I have no reason to believe the stock is ready to head back up. Some downgrades today from brokerage firms, and they are rumored to be awash in bad mortgage paper. Let’s hang in another day.

VTOK: New Idea

The response to new idea VTOK was pretty anemic. I believe the story is reasonably compelling, but I don’t think the market really gets how big the Amerivon relationship will be. More will come out in the future.

SPKL:

Stock continues to languish on light volume. The company is doing great, but the stock needs a catalyst to get it moving again. They came out with their 10K, so I will do an in depth BLOG on it. Big winner in the next bull market.

EFSF:

Stock firming a little in a pretty brutal micro environment. I like the second test of the lows, and some volume starting to show up. Might get some legs in this one.

PNWIF:

Showing some signs of life today as it is oversold in a news vacuum. Costco services should start soon. Big winner in the next Bull market.

AAPL:

I missed it waiting for the all time bargain basement steal. I don’t believe the volatile madness is over, so might get another chance.

CREE:

In no man’s land. Sticking with my plan. I have my 2k shares in the mid 28’s- will buy more if I see it back in the $25 to $26 range- will sell calls against it in the $30s. Today, nothing to do at $29+.

Overall Market:

After a huge week and a big Monday, the market should be giving some ground, but it’s not. Bullish, but still half the day to go. The environment is finally improving a little, and perhaps the micro will start to show some signs of life before too long.

PNWIF came out with its Q1 numbers today- as usual, right up against its reporting deadline in Canada, and way past the deadline the company would have as a US domiciled company. As they now own UK based Pixology, and operate in both the US and Canada, and are now headed to Argentina, I can understand the challenges of putting it all together. However, lots of other International companies do it efficiently, so this is an area that needs improvement.

In short, a quick review of the press release suggests the following: PNIWF gets an A+ for top line growth, a B+ for balance sheet, and a B- for profits.

The top line numbers for the Holiday photo processing business came in at $4.3 million- up from $1.5 million the same quarter in 2006- this is just outstanding growth- the kind of growth the market will pay up for.

On the balance sheet side, PNWIF ended up with about $11 million in cash and receivables, against $7.4 million in current payables-that’s about $3.6 million in real cash- not bad when you factor in the Pixology acquisition.

The company generated about a $1 million loss, but had nearly $1 million in non cash amortization expenses- suggesting the quarter was about a break even from a cash flow point of view. It would have been nice to see a profit, but the company is thinking a bit longer term, and invested a fair amount in R&D- about $1.5 million. Much of this expense can be attributed to the build out for Costco and Sam’s Club.

Here’s a look at the chart:

PNWIF is trading right in the middle of its moderately ascending triangle. That’s what good numbers will get you in today’s market- a stock that doesn’t go down.

Today’s numbers seem to be a non event for the stock price. If you have a long term perspective, $10 might be a realistic target.

Again as with most other stocks I am watching, if you are looking for a short term trade, it will be tough. The market is to blame, not PNWIF- PhotoChannel is moving in a great direction, and these numbers should start getting a lot better - Q4 and Q1 ‘09 (Sept to Dec) should both be big relative to the previous year.

At long last- PNWIF reported its year end numbers- pretty timely you say? Already out just one month into the calender year? Not so fast.

PNWIF’s fiscal year ends at the end of Sept- therefore, we are finally seeing the audited numbers from Sept ‘06 to Sept ‘07. If they were a US reporting company, they would have had until the end of December- since their primary domicile is Canada, they follow Canadian Regs, which as a small company gives them an extra 30 days to get their filing in front of investors. I believe this length of time is a weakness of the company- they should get better at reporting in a more timely manner.

On to some major pluses. First and foremost, today’s press release notes PNWIF has landed Sam’s Club as a customer. This is big stuff, and I’ll explain why. Costco was the first, and now Sam’s Club is the second defection from the Hewlett Packard (NYSE: HP) platform, to tiny, unknown PhotoChannel’s platform. The bottom line- little PNWIF has now pirated both Costco and Sam’s Club away from HP- that’s a huge coup, and suggests several positives.

1. I believe we can assume the PNWIF solution simply works better than HP’s- which is really saying something with HP’s huge resources

2. The addition of both of these customers will have a major impact on PNWIF’s future- once implemented, the top line should grow quite dramatically

3. Could other HP customers be far behind? The first two had to be the hardest.

There are a few other highlights very favorable for shareholders in the results. Top line revenues grew very strongly- up 84% over the previous year to $7.5 million- these results only include 2 months post Pixology acquisition.

Secondly, PNWIF migrated transactional revenue- anotherwords the revenues they generate from photofinishing orders- from 41% of revs in 2006 to 64% in 2007- this is a major positive for the cash flow, as transactional revenues have a far higher margin for the company.

The company also booked losses of $6 million. Digging in a little, you can make some adjustments to evaluate the over all health of the business. $1 million was one time acquisition costs- $1.4 million was non cash dep and amort- $1.8 million was absorbed from the dollar loses value against the Canadian dollar- $600k was non cash stock related- Operationally, the company really lost about $1.2 million, which is acceptable considering the level of growth and corporate activity.

Looking out over the coming months- here’s some game changing events which could have a major impact on the stock:

Q1 numbers should be out before the end of February- Q1 is their best quarter of the year as consumers engage in lots of photofinishing.

PNWIF is now in the process of migrating all the data for both Sam’s Club and Costco to their servers. Here’s how it works- say you have a photo album you have uploaded to the web at Costco. In the past, your digital images would have been stored on HP servers- they now have to move over the PNWIF servers- as the consumer, you don’t see it, but it is happening in the background.

Costco and Sam’s Club will start generating revs for PNWIF sometime in the April to June quarters. My guess- jointly, they will generate about $10 million in annual revenues for PNWIF- this will be very high margin business- all transactional. As Online to Retail photofinishing grows (this is where you upload your photos online, order prints, and go into the store to pick them up in 1 hour), that $10 million number will grow as well.

So- look for a strong Q1, followed by a traditionally weak Q2 and some expenses associated with implementing the two new clients, and lots of hoopla around flipping the switch for Costco and Sam’s Club sometime in April or May.

I suspect PNWIF will turn profitable in fiscal 2008 and stay that way on an ongoing basis. I believe the top line numbers will at least double again. As they make the turn into fiscal 2009, they should be able to achieve annual revs in the $20 million range, and be very profitable.

Here’s a chart to show how the stock is behaving:

This is a very similar chart to SPKL- this one is an ascending wedge, which suggests the stock will grind higher to the point in the wedge before breaking out or breaking down. This is a weekly chart going back to early ‘06, and showing where the OTC Journal starting covering this idea at $1.80 in October of 2006.

In this lower volume environment, there are probably a lot of charts that look just like this, particularly if the company is delivering. Investors are reluctant to part with their shares, but new shareholders are a scarce commodity.

This is another one that should have its day once volume returns to these smaller stocks. I would love to see it grind up to $4, as then it would have a real shot at a NASDAQ listing.

Here’s the wild card- there are two horses left in the HP stable- Wal Mart USA and Walgreens. They are now in Sam’s Club- could WalMart- the largest company in the world- be the next to defect? The have WalMart Canada already. NASDAQ listing? A number of strong possibilities could effect the stock price to the positive.

PNWIF is in break out mode today. After a long period of silence, the company has knocked the cover off the ball today with big news.

According to a mid day press release, PNWIF has been awarded the contract to provide the online interface for all of Costco US’s (NASDAQ: COST) online photofinishing needs.

While on the surface this represents great news, there is even a stronger underlying theme here not covered in the press release.

This new contract represents Costco’s change over from Snapfish, owned by Hewlett Packard (NYSE: HP).

Hewlett Packard acquired Snapfish several years ago to get the company into the online photofinishing business. Snapfish came over with a number of large clients.

Today’s announcement represents a Costco defection over from HP to tiny, Canadian based PNWIF, a major coup. Other major HP customers could be close behind.

Here’s today’s chart:

As you can see, the stock has broken a downtrend line from last Spring’s $5 peak, and at some point should now go on to make a new high.

There could be more business like this for PNWIF around the corner. Also, with the stock solidly over $4, look for a jump to the NASDAQ SC from the Bulletin Board. There’s probably your next step.
If you are wondering, I wouldn’t jump in and buy the stock right now. Give it a day or two to cool off. I have been saying this could be a $10 number. Stand by.

Comments and questions are welcome.

PNWIF finally released it Q3 (June quarter) numbers today, and in my view these will be a non event for the market.

The company delivered revenues of $1.3 million, down a little from the same quarter one year ago. They, of course, generated a loss. Margins improved quite dramatically as the business has evolved from installation revenue to transaction revenue.

In my view, the numbers are fairly meaningless. Here’s why- they don’t come close to reflecting where the company is financially today due to the Pixology acquisition.

The closed on the purchase of the company in early July, and paid over $17 million in cash. I haven’t seen Pixology’s hard numbers, but I do know they enjoyed a substantially better top line than PhotoChannel.

Until we can get the picture of the two companies combined, we don’t know where we are. Unless PNWIF chooses to provide some voluntary disclosure, we won’t know until into January as September is their fiscal year end.

I like this stock right here- I think it’s ready to rebound. If it sells off a little on the numbers, I believe it is an opportunity to accumlate. The tough summer months are behind. Look for a pick up in information flow, corporate activity, and new business.

We’ll see what happens with tomorrow’s numbers. Comments and questions are welcome.

PNWIF has been one of my best ideas in some time, and the picture just keeps improving. The stock has shown remarkable resilience post May to July correction, and higher levels look like they are definitely in store.

Not much has changed since the observations I shared in the June 25th edition. The Pixology acquisition is being assimilated- the expectations are for new deals with the likes of Costco and perhaps Rite Aid. They have their proverbial foot in the door at both companies.

If you are looking to get into this stock, and are looking for a pullback, Q2 numbers should be out by the end of August. When Q1 numbers came out, the stock took a pretty good hit as investors were reminded this is still a pretty small company.

Without further adieu, let’s look at the chart:

You can see what a great year we’ve had with PNWIF. This is a weekly chart. I started covering the company at $1.80 last September, and we saw a high print of $5 back in January. That’s about 2 /12 times your money in the first six months.

PNWIF leveraged the good fortune in their stock price by raising $15 million at $3.60. It’s dilutive, but at a fixed price, so not too bad.

They used most of the capital to buy Pixology, which about triples their annual revenue run rate to about $10 million.

After the post Q1 numbers sell off, the stock has turned right around and appears to want to challenge the $4 level again, which brings a NASDAQ Small Cap listing back into the picture.

The rebound has been impressive, and I believe the summer lows have been made. This stock could have another double or triple in it over the next year. It is a theme investment- a play on the burgeoning world of digital photofinishing. It is one of the only pure plays in the space, and as such could be a good acquisition target.

$10 is still a good possibility for PNWIF. Look for new relationships with some bigger names to get the stock really rolling. These larger players have to start implementing change right now to be in place for the Holiday season.

Comments and questions are welcome.

PNWIF gave ground this week, dropping down to as low as $3.20 on a fairly robust 2 day sell off.

I was hoping this one would hold up going into the summer months, and thereby be positioned to go on to new highs in the Fall ahead of the rest of the gang. My hopes were dashed with this week’s action.

It’s all very funny when one considers this stock traded 800,000 shares in one day at $4.50 a mere one month ago as buyers piled into the stock when PhotoBucket was targeted by Rupert Murdoch’s News Corp.

Alas, the stock started drifting down on lighter volume about a week ago as Q1 numbers came out and investors were reminded this is still a fairly small company with a pretty hefty market cap.

Here’s the chart as I see it:

Here’s a weekly chart going back to the beginning of this stock’s meteoric rise over the winter.

As you can see, as measured on a weekly basis, the stock has given back almost exactly 61.8% of its gains- generally my target entry.

The stock now needs to hold in the $3.25 range, or start trading back up. If it doesn’t, we can look at some longer term time frames to find the next threshold of support.

However, if it does hold, this may be looked at as a great entry level as the bar has been reset.

There are two facts related to PNWIF worth remembering- 1. The company just received $15 million in financing at $3.60 per share with a warrant at $4. Those fairly sophisticated funds are at risk at $3.60. You can now pay less than they did. 2. I originally suggested this one at $1.80 back in September- you should still be in pretty good shape if you picked it up in the $2s.

If this $3.25 area does not hold, you have to decide if you want to hold for the long term or sell and preserve your capital. As long as it hangs in here or starts up, it’s time to load up again.

Spring is busting out all over along with Photochannel. The stock broke a multi month downtrend or consolidation line yesterday, and is powering higher today- looking like it wants to head back to the all time high of $5 it hit in January.

Here’s the chart, showing the stock breaking out from its downtrend line:

It’s almost not a downtrend- more like a period of sideways, low volume trading- a consolidation period of three months wherein the stock traded between $3.50 and $4.

Here’s the news that’s driving the stock higher:

Apparently, image storage site PhotoBucket is being purchased by NewsCorp (Rupert Murdoch) for between $250 million and $300 million.

PhotoBucket boasts 41 million registered users, up from 32 million at the end of last year and 2 million in 2004. It now hosts nearly 2.8 billion images on the site.

PhotoBucket has a different model than PhotoChannel. Photobucket provides hosting services for free, and generates revenues from advertising. PhotoChannel has a transaction based revenue model.

However, shares of PNWIF are trading up nicely in sympathy with the PhotoBucket buy out news. It gives you some idea of the potential value of these internet properties.

In the past I have predicted both PNWIF and CPNE would eventually graduate to senior exchanges. I believe, based on price, you will see PNWIF find its way to the NASDAQ sooner rather than later. An upgrade from the Bulletin Board to the NASDAQ would probably be good for another point on the stock.

PNWIF is probably going a lot higher. As always, comments and questions are welcome.

PhotoChannel has been quiet of late, but interesting news was out on the company early this week, and it’s worth having a look at what it could mean to shareholders.

In case you missed it, PNWIF disclosed it had completed a $15 million private placement. The company sold units at $3.40- each unit contained one share of common stock and one warrant convertible into common stock at $4.

The market seems to have viewed this event as a very mild negative- the stock was around $4 when the news came out. Today it closed at $3.78. It could have drifted down to that level in concert with the overall market.

In my view, there are both positives and negatives associated with this financing. Here’s a list of positives:

• PNWIF will now have $20 million in cash and no debt. This strong balance sheet should open up new opportunities with potential customers who might have been reluctant to do business with the company due to its limited resources.
• PNWIF now has the capital to accelerate some of the other digital products it is developing- i.e. music download kiosks.
• PNWIF will now qualify for both a NASDAQ and a TSE listing. The company should be moving forward on both fronts.

Here are two negatives:

• In my view, the biggest negative is the warrant associated with the unit. The warrant provides and incentive for the participating funds to sell the stock as soon as they can. If the funds can sell their stock for $3.40 or more, they can keep the warrant risk free and still have the upside. Open market buyers don’t have that advantage.
• The dilution is a negative. This financing represents nearly 4.4 million shares of dilution, all of which might be for sale in pretty short order.

On the plus side, the price of the financing establishes a down side of $3.40 - my guess is it probably won’t trade at or much below that level. After all, $15 million of pretty smart money was willing to jump in at $3.40.

Another possible plus- the participating funds could be open market buyers. We’ll have to wait about this one.

So- buy, sell, or hold? I would call it more of a buy than anything. Clearly, $15 million just went into this stock, and those investors believe they can make money from $3.40. So, why sell it at $3.80 if the big money loves it at $3.40?

Their balance sheet will open up some new opportunities, and they could start popping up. Stand by for more information, but for the time being I believe this week’s event makes this stock a buy.

Comments and questions are welcome.

PhotoChannel is rocking again - off to new all time highs. It would appear no one is willing to let go of this stock, and it’s now well above my initial target price of $4.

To date- 144% return for those who acted when I first published back in September.

The stock is taking off again today, here’s why. I have just read a research report, authored by Michael Shonstrom of brokerage firm Emerging Growth Equities.

Michael has been rated a 5 star analyst 4 of the last 6 years by Zaks.

This week, he issued a buy rating on the stock with an $8 price target. I don’t know his time frame for his price target.

Here is a chart of the stock since I first re launched coverage after 5 years of silence at $1.80 back in September:

What can I say. This chart is beautiful, but I wouldn’t know how to technically pick a top. When it trades high volume but stops going up, that will be the top. In the meantime, there doesn’t seem to be much supply here.

I am going to try to get permission to reprint the research report from the author. Stand by for more information.

Comments and questions are welcome.

PNWIF traded to my short term target price today of $4, which is a 122% return from about $1.80 since introducing the company back in September 23rd. All the way around, a huge victory for OTC Journal subscribers.

Very exciting.

So, is it time to take all your profits?- In a word, NO!!!- We could be just at the beginning of a major long term growth spurt in the company. While their revenue numbers will not blow anyone’s mind, their margins are going to be huge.

Here’s another issue to think about- Now that the stock has hit the $4 level, the company could be in a position to upgrade to a NASDAQ small cap listing if it can hold this price for 30 days and meets the other criteria. Since I expect the company to be profitable and it has no debt, it seems likely a NASDAQ listing could be in the cards.

If you have to sell some, make it a partial sale. Here’s the chart since the OTC Journal launched coverage in ‘06:

It’s simple- it doesn’t get much better than that. This one is working out great, and I believe we can ride this horse quite a bit longer.

Comments, questions, and self congratulation to those who own this one are welcome.

PhotoChannel is trading to a new multi year high, and the highest level the stock has seen since February of 2001 when the dot coms turned into dot bombs.

My price target of $4 stands for the time being, but the stock may have legs beyond that level.

There are a limited number of pure plays in the digital photo finishing space- really only 2- Shutterfly (NASDAQ: SFLY)- last year’s IPO at $15 sporting a market cap of $333 million at about $14 (one point below the IPO price), and Photochannel- (OTC BB: PNWIF).

PNWIF has about 30 million shares I&O on a fully diluted basis, so at the current $3.30 level the market is saying the company is worth just south of $100 million.

PNWIF is a Canadian company, and trades under the symbol PN on the TSX as well. Since they are primarily a Canadian reporting company, their rules for disclosing financials are a little different. In the US they would have had to file the year end (September year end) by the end of December. In Canada, it extends to the end of January.

Year end numbers are due out any day, and within several weeks we should also see the December quarterly numbers, which I believe are going to be quite extraordinary.

Fund managers are embracing PNWIF as a value as compared to SFLY. Many, including myself, believe the PWNIF business model is more compelling than SFLY.

SFLY is in the mail order business. You upload your digital photos to their site, and they process and send you prints in the mail.

PNWIF on the other hand simply provides the online back end interface for stores. Consumers upload their photos, order prints, and pick them up in their local CVS, WalMart, Costco, etc. PNWIF collects about $.02 per print.

PNWIF does not have the burden of customer acquistion or infrastructure costs for photo processing. They simply take the order.

Therefore, when the time comes to compare SFLY to PNWIF, you have to look at the gross profit numbers and the net numbers.

Here’s the current chart going way back just for fun:

As you can see from the blue line that represents today’s high, PNWIF hasn’t seen this levels since 2001- six years ago.

Who’s says reverse splits are bad? They are great when used for the right reasons.

I believe this stock is now trading up in anticipation of numbers- not the year end through September of 2006- but their fiscal Q1- Oct to Dec of ‘06.

The stock will probably continue to trade well up until those numbers come out, then we will see where they are. $4 remains my short term target, but Q1 numbers could result in an adjustment higher.

You should be doing very well in this stock as I first brought it to your attention at $.18 prior to the 10 for 1 reverse- or the equivalent of $1.80. Therefore, we are now up 83%.

Comments and questions are welcome.

What a great week for PNWIF. If you didn’t act after last weekend’s BLOG, you can’t say you didn’t have the information. In fact, you had information few had in the market. It wasn’t because we had any “inside information”. We simply had the good fortune to get a little detective work done on our behalf.

Kmart became a client. You knew, I knew it, but the rest of the market just started catching on about Tuesday. You had all day Monday in the $2.50 to $2.60 range. Today’s close: $3.19. Net move on the week: 22.6% and a new multi year high. Very exciting.

Here’s the chart:

They say persistance breaks down resistance. It took three tries at the $2.80 level to break down the resistance in PNWIF. The break down of the resistance led to a break out in the stock.

Since the stock hasn’t traded this high since 2003, it’s really tough to say how far it will run on this surge. Remember, my short term target price on this stock was $4.00 all along ($.40 from the pre reverse split price).

This is an example of a reverse split that is working. They aren’t all bad. This company was done raising money and ready for institutional support. Their timing was perfect.

I started with this one back in August at $1.80. I would use caution on opening any new positions, but the stock could just keep clipping up the charts for all I know.

This turned about to be a huge winner over this short period of time. Comments and questions are welcome.

The OTC Journal goes out to a lot of investors, and since we have a pretty big reach we get some pretty good information before others get it. Sometimes, we simply have a competitive advantage on the rest of the investing public. This is the power of many.

I got the drop late this afternoon thanks to two of my sources who are watching for developments very closely.

For PNWIF, the CVS relationship earlier this year made a lot of believers, and this stock is developing a bit of a cult following. There hasn’t been a lot of demand lately, but there appears to be almost no supply. I think this stock is poised to move up- the market is just drooling for an excuse.

That excuse could be coming in the near future, thanks to what I learned today. One loyal supporter sent me the following link:

http://kmart.pnimedia.com/home.aspx

If you visit this web page, you will find it is the photofinishing order page for KMart. If you look at the bottom, you will find the following statement: “Powered by PhotoChannel Networks, Inc.”

There has been no formal announcement, but it appears PNWIF has now landed the KMart as a customer.

Look at this chart:

This stock has been trading very well throughout this entire year. It has been nearly a triple off the level it turned in 2006.

I first brought it to everyone’s attention at $1.80. It closed Friday at $2.57. The stock has surged in price in the last couple of days. My target continues to be $4, and my SSL $2.10. At this point, I don’t believe $2.10 will ever come into the picture.

Buy this one before the rest of the market learns about the KMart relationship.

Comments and questions are welcome.

Special News Flash- Just got this 411 directly from the company at 11:25 Pacific: PHCHF will be trading tomorrow under a new symbol on the US Bulletin Board- the new symbols are as follows: PNWIF on the US bulletin board, and PN on the TSX- effective tomorrow morning.

The PhotoChannel reverse split did not go as planned today- it was FUBAR- an acronym widely used in military circles- it stands for (decorum prevents me from using the full words) Fu**ed Up Beyond All Recognition.

The stock opened for trading in Canada today under new symbol PN, but was halted for trading shortly thereafter when the powers at be learned the stock was not trading post reverse split on the US Bulletin Board. It continues to trade pre reverse split in the US.
In the meantime, PhotoChannel issued a press release pre open this AM which gives investors a glimpse into the health of the company, which is better than it has ever been in the 10 year history.

The company disclosed that over the summer months their business virtually tripled over where they were during the summer months of the previous year.

In addition, they noted the $2 million they currently have in the bank was sufficient capital to prevent them from going to the capital markets for additional financings. Add this to the mix- we are entering the seasonally strongest period of the year for Photofinishing, and 5,000 CVS location are now hooked up and functional. Upload your images to the web site- stop by your local pharmacy in one hour and pick up your prints.

On this news the stock is trading very well stateside- here’s a chart:

As you can see, the stock was trying for a new multi year high today, but has since backed off a bit.

I would not be a buyer today- I would wait and see what happens after this mess is sorted out. We’ll have another look tomorrow post reverse split in both markets. I wouldn’t be surprised to see today’s gains hold post reverse and set us up for a new multi year high.

Comments and questions are welcome.

For those of you who like PHCHF, it’s deja vu all over again from the sell off in CPNE two days ago.

Some of the stocks that have been trading very well of late are finally providing low risk entry levels thanks to corrections in an ongoing uptrend. Two great OTC Journal examples: CPNE and PHCHF.

Both have been rocketing up the charts in recent weeks without taking a breather. CPNE finally corrected two days ago. In the BLOG I called a perfect 61.8% retracement on Tuesday at $1.40- sure enough the stock is $1.65 as I write this BLOG.

Today, PHCHF finally succumbed to some selling pressure. It has simply traded too well of late, and was overdue for some profit taking. It has arrived at a perfect 61.8% retracement level.

Here’s the chart:

There are two elements worth pointing out on this chart. 1- the stock has pulled back to a near perfect 61.8% retracement of the September move. 2. It pulled back on very low volume.

These are two elements which suggest it is currently at the perfect purchase level: as you can see from the chart is it $.1996, or right around $.20.

If you like this one, and either want to establish a position or add to an existing position, technically now is the time.

Comments and questions are welcome.

PhotoChannel Networks has been climbing the charts nicely since I published on the stock at the $.19 level on September 23rd. Today, the stock made an intraday high of nearly $.26, and finally cooled to close at $.23. If you bought it on that first Monday, just one week ago, and sold it today north of $.25- net return 36%. Not bad for the first week.

However, I didn’t start covering this company for a move to only $.25. I am looking for $.40 to $.60 by year’s end. The stock is trading very well because there is a lot of anticipation about this company’s potential for growth. With the interest in this stock, I would assume a major news event yield a big, spiky run. Those who really pay attention to my writings know I consider big spiky surges to be good selling opportunities.

In fact Shutterfly, which I suggested could be a hot IPO and a catalyst to put a bid into PHCHF, is now trading at a discount to the IPO price. However, it doesn’t seem to have had a negative effect on PHCHF.

The stock made a nice surge today, and finally gave a little ground. It’s normal, and the stock was overdue for a pause.

If you haven’t participated in this idea, and still want to, I believe a little caution is warranted at this time. The stock has been on a tear of late, and stocks don’t straight go up without little retracements along the way.

I believe the company will reverse split the stock. Probably 10 for 1. They have shareholder approval to do so, and recently gave a number of institutional presentations. Most institutions simply can’t buy $.25 stocks, but many can buy $2.50 stocks.

I believe a reverse split would be healthy in this case, but most penny stock investors view reverse splits as negative. Therefore, in the event a reverse is announced, the stock could sell off a bit, and that would represent your opportunity to accumulate at a reasonable level.

Here’s the chart with a 61.8% retracement level which has proven such a good level to accumulate in the past:

Right now, the 61.8% retracement level off the recent surge is $.1982, or $.20 just to round it off.

In the event of a pullback in the stock, the $.20 level would represent a great entry level. SSL on this one is $.18. Don’t forget- it’s PHCHF on the OTC BB south of the Canadian Border, but for our friends to the North, it is PNI on the TSX.
Comments and questions are welcome.