Spicy Pickle- We’re Just About There

Thanks to the big two week sell off in the market and the extraordinary run up in the stock, SPKL is behaving pretty much as predicted. Here’s what’s happening. Those same investors who bought the stock because it was going up without really looking at the company, are the same investors who are now selling it because it is going down.

If you took my advice and made either a complete or partial sale when the stock was up in the stratosphere, you should be getting excited about buying once we hit a bottom, which is rapidly approaching.

Here’s a look at the chart:

spkl1.gif

As you can see, the 61.8% retracement for this stock is $1.13. That should prove to be a fairly low risk entry level. That’s not to say the stay might not go a bit lower, but your downside should be pretty minimal at that level. Today, we are trying to get down through $1.20, so we are very close.

Here’s what I find very noteworthy- as the stock continues lower everyday, the volume is also dropping quite significantly. This low volume sell off is just the kind of pattern that leads to a quick turn back up when conditions right themselves.

I wouldn’t mind seeing the stock trade sideways for a couple of days, but in here it could simply turn back around in a hurry.

It’s time to start looking to be a buyer. Personally, I couldn’t be more excited. I would like every OTC Journal subscriber to own lots of this stock. The last time I suggested it was a buy, the stock was $.90. We are very close now, if not there already. Sometimes, a little patience pays off.

11 thoughts on “Spicy Pickle- We’re Just About There

  1. The previous 10Qs were 5/14 and 8/14. The next one should be 11/14. Assuming it is as bad or worse as the previous two, would that be built into a $1.25 stock price? Thanks in advance for any hypothesis regarding earnings.

    Editor: The 10Q will show substantial losses, most of them on paper. The company spent a lot of money in the form of cash for IR services, etc, to create a market for the stock. Also, a lot of money on accounting and legal to go public. However, this investment is all about the growth of stores nationwide, so I’m not sure it will have a major effect on the stock price.

  2. As per your advise I sold near the high for a double, bought back part at 1.43, and put in an order for more at 1.12, which hit today. Unbelievable. Thanks.

    Editor: That should do it on the downside, but this market is pretty squirrely, so it’s hard to say for sure. However, it sure did a quick reversal yesterday, and there are a lot of people who made a lot of money in this stock who are looking to buy back in.

  3. I know many of your readers are looking for a short-term profit, but what do you think of this stock as a long-term (1-2 years) play?

    Editor: 2 years- I believe it’s $3 to $5. Just my opinion. 300 to 500 stores with a 1/2 billion market value. One year- a little tougher to call.

  4. I also believe in SPKL for the long haul. However, I would wait a little longer for an entry point of less than $1.

    I predict that the stock will keep declining in the short run up to it original value of 50 cents or even lower.

    Dont get me wrong! SPKL has a lot of potential but has only 30 stores open. Right nw it is a very small franchise and it will need time to grow. Panera has 1000 stores open!

    S

    Editor: I’m pretty sure this past week was just a correction in an ongoing bull market. However, if I am wrong, and we are in for a protracted length of time where the market keeps getting clobbered, SPKL could be in for the rough road you suggest, along with many other stocks. Hence, my publication on SSLs this weekend. However, the comparison is a bit silly. Sure, Panera has 1000 stores. It also sports a market cap of $1.18 billion. SPKL is trading at $54 million. From where it stands today- which one do you believe has more upside growth potential over the next five years? Worth considering. Thank you for your input.

  5. I was fortunate to take the plunge at 1.10 and rode it up to 1.89 sold it all now bought back in at 1.19 lets hope deja-vu all over again!!!
    al

    Editor: So far, so good. Well done- for now. If this turns out to be a correction in an ongoing bull market, you might get to relive the first time around. I can tell you one thing- I don’t think the company will disappoint you on the progress front- I believe there is lots of good stuff to come.

  6. so far right on the money with this one Now I’m waiting for traceguard that should be the big one

    Editor: Perhaps a little longer term, but could be worth the wait. Lots more to come out on TCGD in the future. I believe the stock would have been a lot higher had we not had such a rough week in the markets.

  7. So is it your opinion that at 1.34 we should wait for another pull back or jump in now?

    Editor: That’s a good question. I believe that if the overall market wants to stabilize here, it’s not a buy for a one or two week trade, but it is definitely a buy for accumulation for medium to long term investors. If the market wants to continue in a free fall, it’s going to provide another great entry level at some point. This stock is just trading great- no other way to look at it, and there is probably a lot of good stuff coming out between now and the end of the year.

  8. What should I do about the 750 shares I bought at 1.97? I have bought back in at 1.18 and 1.26. Do you think that when it hits 2 again, it will drop again like bricks? I really want to sell that 750 and buy back in lower when I cover my cost basis.

    Editor: As I said in the weekend edition, if you are a trader, you have to use discipline and use SSLs. Since you didn’t-the question is what do you do now? You have to decide if you are a long term investor, or a trader. If you are a long term investor, looking for where the stock could be in a year or two, it doesn’t matter. If you want to try to make money on this idea in one to two months, I guess you could sell and hope it goes lower. I believe that will only happen if the market tanks again, which is entirely possible. Very tough call. Here’s what I don’t understand- why did you buy it at $1.97 when I was telling everyone to either sell or wait for a pullback- I was selling shares myself up around those levels. If it were me, I would just hold the shares and forget about it. You bought at the wrong time, and didn’t buy again at the right time. Doesn’t mean you are going to lose money if you’re in the right company. Just try to be a better trader in the future.

  9. What should I do with the share I bought at 1.97? I really want to sell them when I cover my cost basis and get bck in on the pullback when it hits 2 again. Do you think there will be a major pullback again when it reches 2 or will it blast through?

    Editor: I don’t know if it will blast through $2. I believe it is highly likely if the market straightens up. If the market continues tanking, there will probably be another great entry level for this stock.

  10. I bought mistakenly 750 shares at 1.96, do you believe there will be another pullback at 2 or will it continue to decline to under $1? Would like to at least get my money back. Have other shares at 1.18 and 1.27 that I don’t feel so bad about..yet!

    Editor: As I said in yesterday’s edition- I don’t believe trading under $1 is realistic. However, yesterday’s quarterly numbers could push the stock down, but the stock is actually up today. The only other negative out there besides the numbers is the possibility of a financing below the market- that would be normal for a public company, but the market could interpret it negatively. Aside from that, unless the market completely falls apart, I don’t see a catalyst to force this stock much lower. The remainder of the year could be filled with all kinds of corporate progress.

  11. I thought it best to ask this one question for all: if you raise capital, assuming non-toxic financing, and you use that money to open stores that make you a lot more money, where is the dilution or wrong in that?

    Editor: There is nothing wrong with that. However, suppose the company goes out and raises $10 million at $1. When announced, the market might not like it and sell the stock down a little, which in my view would be a buying opportunity. Wait until you see what this company does with the capital in 2008, if they choose to do it.