HDY Perfect Entry Level

For those of you who have been watching, HDY hit the perfect entry level this morning and rebounded nicely when it was achieved.

I am not a believer in buying stocks when they are charging up the charts. I like to wait for pullbacks to certain retracement levels before accumulating.

Despite having missed the big move off the bottom as news came out concerning the potential restart of the Guinea project, I was patiently waiting for a 61.8% retracement of the surge.

It came this morning as the stock hit the $1.52 mark, dropped slightly below, the rebounded rapidly.

I stepped in for a small opening position of 5,000 shares at $1.75 having missed the perfect retracement. News came out of an office opening in Guinea, and the stock climbed quickly. I will continue accumulating for my own account, especially if the stock pulls back a bit.

Datascension Makes Multi Month Low

DSEN got clobbered last week just like brethren KAL and HESG. And once again- it was a one day, one trade anomoly. The stock traded about 130,000 shares in a couple of trades and just dropped out of the sky.

I continue to believe last week’s wierd trading activity was associated with the REVCO disaster. When that much cash is pulled out of the market in a short span of time, there is signficant fall out in many places.

I checked with the management at DSEN, and they are on track to deliver record quarters for both September and December, so fundamentally the picture is getting better.

Just like with BPTR, you have to go back to one year ago today to see the stock at this level. And just like with BPTR, if you had bought it one year ago today at the current level, you would have made a substantial return on your investment over the ensuing three months.

Once again, the traditional 4th quarter rally is critical. If it is going to come this year it had better get started soon. It has been one of the ugliest Octobers I can remember.

I believe the stock is a screaming buy at current levels. It require two C’s- courage and capital, and I’m not sure which is more important. Fortune Favors the Bold.

Questions and comments are welcome.

BrandPartners Makes MultiMonth Low

BPTR got clobberedlast week along with KAL in one big sell off day. It wasn’t really all thatbig- but a little stock can go a long way in illiquid markets.

I continue to believe a lot of this bizarre tradingis associated with the demise of REVCO- they werehuge and many normally quiet stocks took it on the chin last week out of nowhere.

BPTR came down hard on the 19th on a mere 107,000 shares of volume- precipitating 157,000 share the next day as the stock made a new multi month low.

Technically the chart simply looks awful. There isn’t one positive thing I can say about the stock technically, other than it is simply cheap. Probably trading about 4 times earnings at this price.

You have to go back 1 year to find the stock trading this low. However, it is of interest to note what happened to the stock over the next few months from this level. It was the perfect time to buy.

As far as I know, there are no fundamental changes at the company. They should deliver well in excess of $50 million this year, and deliver at least another $.14 per share in earnings.

Is this the bottom? I can’t say for sure- it’s very frustrating to find solid fundamentals with no corresponding price appreciation- just slow but sure muli month grind south. I’m now at a break even on the 100,000 shares I have held for about 1 year.

If the 4th quarter rally materializes, I just might have to pick up some more if it stays at these levels. It’s too compelling to stay here for ever.

Your questions and comments are welcome.

KAL Crashes- Now Rebounding

Last week was one I would like to forget. Small stocks tanked. There were no bids around, and positions associated with the demise of REVCO made the market as ugly in one or two days as I’ve seen it in a long time.

On Tuesday, the 18th, KAL was trading quietly at reasonable $1.40- making it an easy hold. A 50,000 share market order sent the stock careening down the charts- the order could easily have been associated with the REVCO liquidation. It made $1.05 in short order.

The stock held that $1.05 level twice, and is now starting to rebound. Nothing has changed at the company other than a very tough October- I still like it for $3.50 to $5 over the long term. Clinical data is what the market needs now.

I now know $1.05 is the perfect level to own this stock. However, since it tried to get below that level twice, and wouldn’t break below, I don’t know if we’ll be lucky enough to see it again.

As I write today’s BLOG, the stock has rebounded to a modest $1.20- $.10 below our original entry level, but not a major catastrophe. A little volume should go a long way in this one, and the $1.50 could be revisited on one good day. Hopefully, that day is coming soon.

Comments and questions are welcome.

NWWV Rebounding on Big Volume

I can only hope some of you are taking my message to heart and putting microcap stocks in your portfolio when they are cheap and no one wants them.

My last edition on NWWV at the end of September was entitled” Newave Can’t Get No Respect”. Apparently, someone is finally willing to give this beleagured issue a little respect.

NWWV traded 2,500 share Wednesday,150,ooo shares Thursday and 350,000 shares Friday.

I have no idea who decided to step up and start buying this stock, but it closed at a two month high today, and hopefully this renewed interest will continue into next week and the stock will try for higher levels.

If you picked up the stock while it was cheap and no one wanted it, keep an eye on the situation. If it trades up into the $1 plus range on this current run, it might be worth taking a quick profit.

Hopefully, this stock will become the poster boy for buying while they are cheap and no one wants them.

Datscension- Third Time Around

DSEN had a minor collapse today on one seller’s instantaneous need to get out of the stock in a hurry. Whoever it is did not sell smart.

I love this stock in the $.30 range- a mere $4 million market cap on over $9 million in sales and positive cash flow- not much downside risk.

If you want to understand all the reasons I like this stock, just go back and check my recent publication on it. Click Here to check out the September 6th edition.

The chart says it all. The stock has now made three trips to the sub $.30 level. Each time the stock rebounded to $.40 in short order.

This company has a solid foundation of business currently, and has some huge new business in the pipeline. It has proven to be a buy every time it came down into this range.

Want to make money in microcaps? Buy low and sell high. In order to achieve that, you have to be willing to buy when no one else wants to. It’s deja vu all over again for DSEN.

Global ePoint- Time to Revisit

It’ finally time to revisit GEPT. This has been a huge win for OTC Journal twice- last December from $2.75 to $6 in a few weeks, and this past July from $3.25 to $8 thanks to CNBC’s Cramer.

I knew the huge run up from Cramer’s recommendation wouldn’t hold- after all it was not a fundmental event. I also viewed the company’s failure to complete the AstroPhysics acquisition a major negative.

The company has also come under some criticism for making a mistake on issuing some consultants warrants- after reading the news, I came to believe it was much ado about nothing- more of a clerical error than anything.

The stock has swooned dramatically once again as all the hot money seems to be coming out. However, looking at the trendline going back to this June, the stock has found its way all the way back to that line and might find some support here.

I have done a little research on this recent swoon, and believe I have found the explanation. If you look at the SEC filings, you will note a series of S-3/a filings in the last couple of days.

Based on experience, I believe an S3 registration statement went effective. This means 2.8 million shares, priced at $2.80 just became free trading on the 13th.

In light of the fact that over the last five trading days the stock has traded about 2 million shares and dropped about 35%, one can easily make the leap that these shares have either found their way into the market already, or the stock is being shorted against those shares.

At any rate, I believe now is the time to revisit GEPT. The Cramer effect, which I know put money in a lot of subscribers pockets, has ended. The company has a lot of new business. The stock is very oversold. $3.75 is a good level to revisit GEPT. Buy when they are quiet and no one wants them- sell when they are all buying.

HyperDynamics Rights Ship

HDY rocketed back up the charts this week. News came out today to explain the dramatic rise in the stock, and I’m a little behind the 8 ball catching up with this one.

As all of you know who follow my commentary on HDY, I turned negative on the situation after the company announced their applications for permits to drill in the West African Guinea waters was denied and they were informed their arrangement with the governmentwas off. I suggested liquidating in the $1.40 range.

Subsequently, the stock found its way well below the $1 level, but has rebounded dramatically out in front of today’s news.

HDY announced the management had been in Guinea for two weeks, andConte, the head of the government, had nothing to do with the denial. Here’s a quote from the press release:

Watts reported that, “The Ministre was extremely understanding and gracious. In both meetings he gave a consistent message of support to continue our work in Guinea. He also was very clear in both meetings to explain that the termination letter reported in July did not come from his office and he had no knowledge of it. With that clarification, he then outlined the process whereby SCS could obtain everything necessary to restart our work.”

It would appear on the surface that the Guinea deal is back on, and the upside has returned to this situation.

HDY is a classic example of what I have been harping on for microcap stocks in general this year. Buy them when they are cheap, no one wants them, and no one is paying attention. Sell them when everyone wants them.

Even though I was completely off the mark on HDY, and had no inkling they were reviving the deal, the point still holds.

As you can see from the chart, the stock has now eclipsed the gap created when the news came out and it gapped down. This is a very bullish development.

However, I wouldn’t buy the stock right now. I would wait for it to quiet down and buy at a 38.2% retracement or a 68.1% retracement. I would sell right now if I had the courage to buy it under $1 and was interested in a trade.

I do feel this is one to own once again, and hopefully will be able to pick a solid entry point. The upside that makes this one worth the risk is back, and I am hoping someday to see this one in the $6 to $10 range.

Your comments and questions are welcome. I’m sure many of you would relish the opportunity to point out I was wrong to suggest getting out. I’ll save you the trouble. I don’t have a crystal ball, but as it turned out, I was wrong. I was also wrong about the Mets in ’69along with dozens of microcap stocks. Sometimes the dog bites you.

HESG- Tell Us What You Think Of SHUGR

This BLOG posting has been set up specifically for you to share your thoughts on SHUGR. I personally use it, and I believe it is the best sugar substitute on the market today.

HESG just introduced this product to the market this past summer, and they are beginning to get sales traction and recognition.

While I believe there is a substantial market for direct retail purchases, I also believe the holy grail for shareholders of HESG comes if and when the product becomes the sugar substitute of choice for mass marketed foods and beverages- i.e. included in major bakery products and/or beverages. You have to be a shareholder before it happens if you are going to make the major gains.

Please take the time to share your thoughts on SHUGR. Over 2,000 individuals requested a free sample, and I would appreciate your impressions on the product, the company, and the stock. Everyone with an interest will be able to review the comments.

Please use the field below to submit your comments.

AMW Tanks- Explanation in SEC Filings

Despite the weak market conditions last week, I was surprised to see AMW tank on relatively high volume. There have been no formal press releases out of the company since September 8th when they announced continued order flow from the Hurricane Katrina relief effort.

Today I took the time to look at recent SEC filings to see if there were any changes to explain the swoon in the stock. $.20 had served as support for the stock for the last several months, and the drop below might signal that there are negative events in the offing.

Here’s what I know from the 8k filing with SEC. Chairman Roger Mohlman was declared in default on a loan. The loan was collateralized with 6.678 million shares of AMW common stock.

If I remember some of the loopholes in the securities laws correctly, I believe shares pledged as collateral for a loan become free trading in a default situation immediately. Therefore, either the market has assumed these shares have become free trading and is selling off in anticipation of excess supply, or the shares are simply being sold aggressively.

What I don’t know from the SEC filings is anything about the loan. Was the loan completely external from the company, and is this just an excess supply issue having nothing to do with operations. Or- was this note used to personally guarantee a loan to the company? I simply can’t tell from the filings.

The stock has traded 3.6 million shares over the past 4 trading sessions, so it’s possible the market has already absorbed a fair amount of the potential supply.

As you can see from the chart, AMW’s recent trip back into the $.40 range on the news surrounding water supplies for the Katrina relief efforts was short lived.

Where this company is financially remains a complete mystery. Despite recent optimism associated with the Katrina relief, the SEC filings contain information about a number of different law suits, foreclosures, and defaults.

Even if the company is getting its head back above water (yes, pun intended), it is clear the company still has many challenges ahead and could in fact be facing some insurrmountable challenges.

Since this stock seems to have 9 lives, and only 8 1/2 of them have been used up so far, my guess is the stock is not a sell at current levels.

The company always seems to pull a rabbit out of its proverbial hat. Therefore, if you are ready to throw in the towel, I would take the risk and wait for a bounce.

I can’t make an intelligent comment on the company’s financial condition. September quarterly numbers are not due out until mid November, and if history repeats itself they will be late with the filing.

Family Room- Conference Call Changes Nothing

Last Thursday’s conference call hosted by Family Room’s George Furla did little to change my view thatFMLY is going tocontinue to slowlygrind down the charts underthe oppressive weight of excess supply.The end of 2004 marked the third year in a row the company engaged in a toxic financing.

Despite having 8 movies in post production this year, and completing $180 million in film production, nothing is going to change in the near future. The only hope Furla lays out for shareholders is the possibility of taking out the convertible note or executing a stock buy back program through the proceeds from a major box office success.

Despite having 8 movies in post production, George only forecast two with profit potential “could” find their way in theaters in 2006- specifically 16 Blocks with Bruce Willis and The Wicker Man with Nicolas Cage.

It’s a long time until 2006, and even if the company had a box office success north of $50 million, there is no telling how long it will take until they see a producer profit check. Between now and then, supplies in excess of 10 to 20 million shares could find their way into an unreceptive market.

The pattern on the chart in depressing. This is a weekly chart dating back to 2003. Each leg down in the stock can be tied directly to another toxic financing the company engaged in.

I’m very impressed with this year’s slate of productions. They have raised their profile immensely, and the menu of high profile talent should lead them on to bigger and better productions in the future.

However, there is a pattern here that keeps repeating. Company runs out of cash, engages in toxic financing, shares become free trading, stock grinds down.

Unfortunately, management offered no ideas to change the pattern, and therefore I believe the pattern will continue.

For those who want the hard numbers- here they are: at the beginning of this chart the company had 20 million share I&O. Currently, the company has 90 million shares I&O. The company recently registered another 90 million shares- 48 million of which are realistically going to have to find their way into the market over time. It could a lot more- at the current price that number of shares would only account for about 1/2 their convertible debt. As Mr. Furla stated, $100k of the $2 million in debt has been redeemed so far. If I’m doing the math right, the company has issued about 4 million shares to cover the $100k in debt. All free trading, all with a cost basis below the current market.

Unless massive demand surfaces for this stock, it will probably just keep grinding south. Edison has not been picked up for theatrical distribution at this time. No hope for a big pay day there yet. We are at least 9 months to 1 year away from a payday on this year’s productions.

In the conference call, Furla alluded to an arrangement the company is working on to self finance the promotion and advertising for its own films. That is the only catalyst I see on the horizon that could possibly bring a new and enthusiatic audience to the stock. If not, FMLY will simply continue grinding lower with no end in sight. If you’ve lost patience, just sell it and move on.

Outlook For the End of 2005

With energy prices through the roof, the market tanking, and all the hawkish Fed Speak ( worried about inflation), is the standard 4th qtr rally in question this year?

Despite the heavy layers of pessismism coating the main stream financial media, I believe the 4th quarter rally will probably still come,and in light of this past week’s drubbing of the markets, could be stronger than ever.

I believe the future of the markets through the end of the year are tied 100% to energy prices. I also believe September will be looked back on as a blow off short term top in energy prices, and we should go into a pull back or consolidation phase that could last 6 to 9 months.

With back to back hurricanes, forecasts of huge demand, and dire predictions for the restoration of infrastructure in the Gulf, it’s no wonder speculative buyers bid up prices through the roof last month.

With the natural disasters seemingly behind us for the time being, and every hedge fund manager on Wall Street facing the fact the the only profits in their portfolios this year are in energy stocks, a short term correction is imminent.

Oil has a series of declining tops. The chart looks like a classic “head and shoulders” or double top- both bearish. In addition, the price has recently completed the deadly “double repo” on the 3×3 dma- also very bearish.

I believe oil is going to fall back to one of the two support levels in the chart- If $59 doesn’t hold, look for $52. If we get to those levels- that will be the time to buy energy stocks again. Buy long term holds with a dividend, and you will do very well in the later half of this decade.

As far as the NASDAQ Comp goes, we just experienced the pause that refreshes. In any kind of a pullback- you want to look for support. The Fibonacii 61.8% retracement would put us squarely at 2015 on the NASDAQ- a very low risk entry point.

If energy prices abate somewhat, the FED will become more accomadating and less hawkish- they know energy price have reached the point where inflation is a real danger. Couple that with $200 billion in restoration projects for the Gulf coast next year, and you havethe high likely hood of inflation.

If I am right (a big if)and energy prices come down, there will be less hawkish “Fed Speak”, and less fear of inflation- hence rising stock prices into the 4th quarter. If oil comes down the market goes up. If it doesn’t, I will be wrong at it will prove a tough 4th qtr.

Health Sciences Delivers First Grocery Chain Order

Health SciencesGroup was out with news beforethe open this AM. Meijer Stores, a midwest grocery chain with 170locations,has placed an initial order for SUGR- the world’s best SUGR substitute.

Thisorder is significant in that it represents the firstsales of the product out of the speciality vitamin and nutrition stores and intoa more main stream, higher traffic environment.

As you can see from the chart, HESG gapped up north of the $.80 level in September when the company announced the first reorders from GNC.

In the September 21 BLOG posting, I recommended being patient and waiting for a pullback into the $.75 range. It took some time, but as forecast, the stock has arrived at the suggested entrylevel.

If you like the company and are intrigued by the possibilities of the best sugar substitute in the world, now is the time to accumulate.

Click Here to read today’s press release.

Callisto Thoughts

Since there hasn’t been a BLOG posting on KAL, I thought I put one up so there would be a forum for questions and comments.

If you have read the two editions published to date on the company, you know I believe both the analyst’s forecast- Beacon at $3.10 and Stanford at $5 have every chance of coming through.

Here’s some technical thoughts on the stock. There was a trend reversal in mid August which has led the stock from the very oversold level of just under $1.00 to make two tries at the $1.50 level.

The stock is clearly in an uptrend as the highs are getting higher and the lows are getting higher. Even the recent price surges have taken the stock onto new highs, albeit just by a few pennies.

If you are looking to accumulate this one at a very low risk entry level, you should look at Fibonacci Retracement levels. Your first stop- the 38.2% retracement, is about $1.30. If the stock pulls back, it should hold here in any sort of decent market. If $1.30 gives way, then the next support should be $1.17 (61.8%) retracement.

If the stock continues to move up, a break and close above $1.50 wouldput $1.70 into the crosshairs. For the benefit of the subscribers, I would prefer to see the pullback so we can all accumulate a decent position in this one at the right price.

The next wave of buying will probably be fueled by news concerning clincial trials. When it is coming I can’t say, but if you like the company, you definately want a position before hand.

Your comments and questions are welcome.

VirTra Delivers #2 Contract

In keeping with my theme from the last edition on VirTra- CEO Kelly Jones is continuing to get what he needs to keep the company moving forward.

Last Friday, VTSI announced a second military sale in the month of September- this one to Buckley Air Force Base. Click here to read the release.

This was the second individual sale to a military entity in the month of September- equating to somewhere in the $300k range for revenues during the month.

If the company can continue to get a mere 2 orders per month, they will be around for a long time. They simply have to survive the downturn in their industry’s fortunes.

In the interim, the stock has made a valiant effort to rebound and seems to want to trade in the $.15 range for the time being.

We are now past October 1, and the 2006 DOD budget is available to spend. If the company starts to get promised order flow, we could have a lot of fun from these levels. If they don’t, it will be a long road and we will be waiting for the cycle to complete, and the fortunes of military technology companies to turn up.

I am prepared to wait through the first of the year for developments. If nothing happens, I will re-evaluate. If the big military orders begin to flow, risk takers at these levels should be handsomely rewarded.