GEPT Delivers New Business

For those of you who may have missed it, GEPT was out with some news early in the week. While the market yawned in this continuing lackluster environment, the news may portend some other exciting new avenues of business to come in the future.

It seems a major So California police agency has decided to equip 25 of its patrol cars with GEPT’s video surveillance technology. Video and video storage is becoming a bigger part of chronicling law enforcement activity.

What the press release doesn’t say: due to some unique features of the system, GEPT won the contract over some pretty stiff competition- much larger names were in the mix. Due to disclosure issues, I can’t say who they were. GEPT is growing and will continue to grow. To be in the sweet spot of homeland security, they need to complete the acquisition of Astrophysics – this will put them squarely in the middle of the fray for efficient airport and cargo security systems. While the major US airports are fairly secure at this time, cargo coming through our ports is problematic and represents a billion dollar plus market.

The chart is foming a neutral wedge- the lows are getting higher and the highs are getting lower. The longer it takes for the stock to grind out to the end of the wedge, the more violent the break to the up or downside will be when volume returns to the stock.

I believe this stock will continue to trade sideways on low volume until capital begins to flow back into the homeland security/defense sector. Once it does, this stock will be poised to move dramatically.

This is definitely one to accumulate once the energy rush abates.

As always, comments and questions are welcome.

Torrent Energy- Take Your Profit

Torrent Energy was first covered in the OTC Journal back in the August 3, 2004 edition.That day, the stock closed at $.96. Later in the year I wrote an additional four or five editions on the company as they started developing a coal bed methane project in Coos Bay, Oregon.

The company has an outstanding management team, and could have a very good long term future.

However, as I write today’s BLOG, the stock is trading at $2.73 for a 184% profit over the past 11 months. I believe this is an outstanding profit, and should be taken. The stock could go a lot higher, but you have made a substantial return for taking an early risk, and now its time to let someone else take the risk from here forward.

If you are still holding this stock, take some or all of your profits.

ZAPZ Rebound Should Stall For Now

Despite being an ugly situation, you have to admit ZAPZ has been a volatile and exciting stock to trade over the past two weeks.

The previous BLOG entry on ZAPZ was one of my better calls in 2005. Click here if you want to read it. I suggested several strategies for dealing with the drop in the stock. I suggested to not sell and wait for a rebound if you wanted out. I also suggested traders might consider a high risk buy for an oversold situation.

I followed my own advice and made a tidy score. Note in comment #6 where Ray believes the stock is a good buying opportunity, I respond by disclosing I had purchased 20,000 shares for my own account at $.95. I simply figured the company would be able to come back with something positive, and the stock had a good chance of rebounding.

Yesterday, I sold 10,000 at around $1.45 and 10,000 at about $1.55 for an outstanding two day profit. I haven’t had one this good in a while.

I would suggest those who took my advice and bought fora short term trade follow suit. Unless the company delivers something unprecedented, my guess is the stock will take a breather for the time being.

If you have lost faith in this company thanks to their recent media blunders, in my view now would be a good time to take your loss and get out.

I am not saying I believe the company will fail. While I view this as a high risk situation, I stillbelieve the company has a window of opportunity to get thousands of Smart Cars into the publics’ hands over the next 18 months, and at the same time establish a working relationship with a number of car dealers nationwide to help sell their other products.

I don’t know whether they will be able to pull it off or not. I know there are many naysayers who believe the car is too expensive or too dangerous, and the approval is only for ’03 cars. The car is probably overpriced, but if it’s a hot item that people want, they will buy regardless of whether it makes sense. Also, I believe they will get the approval to sell later model vehicles.

I just think it is a very interesting situation, and an interesting speculation. In addition, you have the benefit of a stock that moves, and not just down. Most microcaps have been simply grinding in a range over the last several months, putting everyone in a complacent state of not caring. If you’re good at it, ZAPZ could be fun and profitable to trade.

Special thanks to the Smart Car CEO – without his comment I would never have seen the stock trade under $1 and gotten such an outstanding trading opportunity.

If you like the company, and are looking to buy or add to a position, I would wait for a pullback at this point. The next leg up will be fueled by an announcment they have found someone to sell them cars, if they can find someone. In the interim, the stock will probably pull back.

As always, your comments and questions are welcome- this is intended to bea forum for both sides of the story.

Xenomics Break Out: 80% Gain Notched

Xenomics has been on a tear over the last two weeks, and the stock made a parabolic rise in the last two trading days. Weeks of low volume accumulation finally led to a tremendous breakout.

This stock is proof that you can never tell what’s going to happen in the small stock world. Three months ago I would not have picked this stock as a candidate for an outstanding short term move.

The company has been getting some great ink in the medical community of late, and the publicity has led to a significant rise in the price of the stock.

I published a “first look” edition on this stock in mid March at $2.50. Today, it closed at $4.46 for a cool 79% gain in three months.

The company is in its infancy, so this idea could be years from maturity, and there could be a lot more to be made in this stock. However, in light of the parabolic rise, I would not be a buyer at these levels. This might be a good opportunity to sell either part or all of your position with the idea of buying it back on a pullback.

In light of the run in the stock, this will be a perfect candidate for Mr. Fibonacci’s 38.2% and 61.8% retracement as an entry level if you don’t own this stock or choose to sell and want to buy it back.

As always, your comments and questions are welcome.

ZAPZ Has Miserable Day

ZAPZ had another miserable day today compliments of the Smart Division of Mercedes Benz. In an article published by Reuter’s, the CEO of the Smart Division of MB was quoted as saying “We do not want to and will not have business ties to ZAP in any way.” Click Here to read the entire press release.

ZAP’s strategy of publicly announcing the $1 billion purchase order with Smart has officially backfired in the worst possible way. 20/20 hindsight is perfect vision, but it is clear ZAP should have subtlely pursued a relationship while implementing its original strategy.

The company should have simply purchased a few thousand cars through distributors, got them into the public’s hands, and then pursued a potential relationshiponce they didn’t really need it.

ZAP’s credibility is damaged severely at this point. The market responded by knocking another 37.5% off the value of the stock on huge volume.

At this point, ZAP should move forward with one of the other strategies Steve Schneider laid out in the interview. They should acknowledge they probably won’t be doing any business with MB, place an order with a distributor that can deliver cars, get the cars, and get them converted and sold. They should prove they can deliver before embarking on any more media battles.

As you can see from the chart, ZAP has taken a severe drubbing since announcing its billion dollar order with MB. So, where to from here? That depends on you. Here are my thoughts:

1. If you have given up on this company, and are stuck in the stock, don’t sell. The company will no doubt have some response and the stock will probably rebound. That would be the time to sell. My guess is the stock will probably bounce to around $1.40 in the next few days.

2. If you are a long term investor and believe they will get cars, sell them, and the other portions of their business could thrive as well, don’t worry about this too much. Nothing has really changed since last week with one exception. It appears they won’t be buying cars directly from MB.

3. If you don’t own it and are looking for a quick trade, the stock might be a buy. The market has probably overeacted to the news, and could bounce easily.

I still believe the company has a reasonable chance of selling a fairly large number of Smart Cars, which means the stock has upside potential. High risk capital only- this company has to prove itself at this point.

If Mr. Schneider were to ask me what to do, I would tell him to go get a couple thousand cars, get them converted, and get them sold ASAP. This is the best way to restore the company’s credibility.

Sometimes the most money is made by those with the courage to buy at the point of maximum pessimism. We’ll see what happens here.

GEPT Downward Bias on Open

The big news from GEPT was not big news for the market today in the early trading. The stock closed yesterday at $3.06, and reopened today at about $2.80. This could mean one of two things. Either the stock had moved up in anticipation of today’s news and frontrunners were sellers, or the market simply did not like the news. When a group falls out of favor, it falls out of favor.

The bad news- the stock does not appear to be setting up for a short term trade. They are tough to come by these days. The good news- if you believe longer term that money will flow back into this sector, you can now pick up the stock at the same level their recent $5 million funding source is locked in at. Other good news- I have drawna trendline in the chart. Despite the early knee jerk reaction, the stock has not violated its uptrend and appears to be bouncing. The current trend seems to be intact.

As always, I am interested in your comments and/or questions on this one. Please feel free to have at it.

ZAPZ Interview

Today’s OTC Journal has an audio interview with ZAPZ CEO Steve Schneider. I invited him on to clarify all the issues surrounding the company’s recent $1 billion purchase order with Mercedes Benz for 76,500 of the Smart Cars.

To access the interview directly, simply:

Click Here

You need Real Player installed on your computer to hear it. For a text version, see the most recent edition.

ZAPZ doesn’t know if they will have a relationship with MB, but Schneider claims they can still get cars through distributors and currently have the ability to refit 15,000 cars annually. This equates to about $250 million in sales and $25 million in gross profits. I believe most people want to know when it’s going to happen, and how ZAPZ will accomplish delivering the cars.

Technically the stock does not really look all that bad. Clearly, it is very volatile and not for those with a weak stomach. It is prone to dramatic surges and drops.

This is a weekly chart going back to the Fall of last year when the stock woke up. Despite the recent drop, the stock is continuing to make a series of lower highs, which is bullish for long term investors.

If you have an interest, simply listen to the interview and draw your own conclusions.

As always, I am interested in your comments or questions.