In Case You Were Wondering

In Case You Were Wondering

Just in case you were wondering, I thought it was time to provide and update on my latest ideas- one that has been rather disastrous, and one that is yet to be decided.

Shorting Magic Jack (CALL) for a quick trade and owning iTrackr (IRYS) have been my ideas over the last month, so here’s an update on both:

Shorting Magic Jack (CALL)

I’m not opposed to taking a bite out of both sides of the apple. Magic Jack (CALL) provided us with a generous meal this year as we notched a 400% gain on the call options I recommended back in January when the stock was $16. Now it’s $24.

When you think about the gain, it’s extraordinary. Let’s look at stock market darling Apple (AAPL)- over the same time frame, AAPL has risen from $400 to $600, while Magic Jack (CALL) has risen from $15 to $24. AAPL is up 50%, with CALL is up 60%. So far this year, CALL has been the better stock to own.

Last Friday I recommended going short CALL into their annual earnings report which, according to Yahoo!, was due out Monday after the market closed. I describe this kind of trading idea as an “Event Driven Trade”. The events leading up to recommending the trade are the upside movement in the stock over the past two months, combined with the earnings release.

It’s been my observation over many years of trading that whenever a stock runs up into an event- in this case the year end numbers, 95% of the time it will sell off once the proverbial cat is out of the bag.

In the case of Magic Jack (CALL), apparently Yahoo! and the management at CALL are not talking, and Yahoo! has it wrong. CALL has not released it’s 2011 audited financials, and as such the event I’m betting on has yet to happen.

In fact, if you look at the daily earnings calender, Yahoo! how has the company releasing its numbers every day. Sooner or later their calender will be right.

Fortunately, I chose to buy the April $25 put options at $3, which leaves me plenty of time to wait for the release.

Under normal circumstances, CALL is required to file their annual 10k audited financial statements today- March 15th. However, there are several factors which could affect the timing. If the numbers are not disclosed today, I believe the company has a grace period of a week or so, and then it can file for an extension to buy another 10 days if required to do so. When companies file for an extension, the market generally views this as a negative, so I would expect the stock to ease down during this time frame.

There’s one other factor that could effect the timing- CALL is actually a “foreign issuer”- the company is domiciled in Israel. This could effect the amount of time they are given to disclose their year end numbers.

So, we have no choice but to wait it out- at present, we are simply on CALL Waiting. The company itself has provided no disclosure about when its numbers will be coming out, but this could be one of those situations where they make some sort of announcement a day or two before.

I’m still long the April $25 puts.

iTrackr (IRYS) Clobbered -Attention Kmart Shoppers

My most recent penny stock idea- iTrackr (IRYS) is a bit troubling. There’s really no nice way to say it- this stock has been an absolute mess. This could end up being a great opportunity for those who either sat on the sidelines or sold on the way down, but the chart is just butt ugly.

There’s been a number of explanations bandied about. My own personal conclusion- I believe short sellers pounced on this stock and beat it down back on Monday, the 5th. The sudden drop caused existing shareholders to panic and just sell with little regard for price. Shorts targeted this one due to some rather inflammatory information that was published about the company.

As an young and under followed penny stock, the bottom simply fell out. The volume in this stock has been rather insane against an estimated “effective” public float of about 3 to 4 million shares. At present, the volume would suggest the entire float is turning over every 2 to 3 days.

I suspect this stock could be good for a bounce for a few reasons. For starters, their platform for marrying local consumers to local merchants is just getting off the ground. It’s only available in Beta Test version, but it’s very robust and has a lot of features that should eventually play well with both sides of business.

Secondly, if there is a big short in the stock, eventually the shorts will buy back and close out their positions. That’s how they lock in their profits.

A Fibonacci bounce suggests this stock is entitled to regain 38.2% of the ground it lost. If it does, the target price is circled in green on the chart. The stock would be entitled to bounce back to about $.38 which coincides with the 50 day moving average.

From today’s level, that would be a 52% gain, and a suitable risk. At this point, it’s unlikely there’s a lot of downside risk technically for the next few weeks, as it’s likely everyone that wanted to sell has done so- or pretty close to it.

I sold very little of my rather large position in this one on the way down, so I’m still holding quite a bit and hoping for a turn around.

There’s the update on both situations- just in case you were wondering.

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Flipping the CALL and IRYS Pancake

Flipping the Pancake

Two of my 2012 calls have gone insane this week to the good and the bad, and it’s time to turn the pancake over on both of them. Magic Jack (NASDAQ: CALL), which has been a monster win, is offering us another opportunity to make money in my view. More below.

Recently introduced iTrackr Systems (OTC BB: IRYS), has been a absolute mess and I believe has been targeted by market makers who are aggressively shorting the stock. The stock might have now sold off enough to be good enough for a bounce, and that’s the other side of the pancake.

Here’s a review:

iTrackr (IRSY) Under Attack

My recent idea on IRYS looked pretty darn good out of the gates- having made a short term move from my $.68 entry level to about $.85- a quick gain of about 25% in the first two trading days. Yesterday, however, was a different story.

While I was making an appearance as the guest host on the Big Biz Show ( btw- sorry the online broadcast got screwed up- it should be working now)- the stock got absolutely annihilated.

To me, this looks like a classic manipulated short raid on the stock by market makers. You simply don’t see stocks trade like this for no reason.

Actually, in my view, there were some reasons behind this little penny stock getting tagged with the short seller bulls eye- there was some content published on the company from other sources that was highly inflammatory in my view, and brought poor little IRYS squarely into the short cross hairs.

The stock has traded an incredible amount of volume since making it’s debut last week. There are only about 8 million shares in the public float. The stock has traded 8.8 million shares since last Wednesday- there’s no way every single share in the public float has changed hands.

A quick look at the chart tells the whole story. Stocks don’t drop like that with no news. The two day drop is insane.

The stock may have made its bottom today. There was mid morning news that seemed to turn the tide, and it’s an endorsement of the company’s potential from a really strong investor.

About mid morning IRYS disclosed it has received an executed term sheet from Cornucopia Fund- managed by Omar Amanat. According to the news, Mr. Amanat is the co-founding board member of Twilight Studio as well as Summit Entertainments largest shareholder; Peak Group Holdings. He provided and raised 50% of the capital during Peaks $1 Billion financing of Summit Entertainment. Recently Summit was sold to Lions Gate Entertainment Corp. (NYSE: LGF - News) for $412 Million.

Summit Entertainment owned Twilight Studio- the studio of the Twilight Movie Series Franchise. Just Google Omar Amanat - you will see this guy is one big hitter. The fund executed a term sheet which allows them to invest up to $1 million in IRYS at a fixed price of $.40. It was not disclosed how much has been invested so far. The shares the fund is purchasing will not be free trading for 6 months.

The stock is regaining some ground since this news came out. Perhaps short sellers are rethinking their view on this company after the indirect endorsement of one of the most astute investors and successful businessmen around.

In the meantime, my SSL, as published on the home page, for IRYS was $.60. If you’re out, you might want to consider coming back in. This could be a “V” shaped bottom if short sellers decide to start covering.

This one could be good for a bounce. I haven’t seen one attacked like this in sometime, so it’s a little strange, but could be a tremendous opportunity.

BTW- Full disclosure-I’m still long every single share I had when I published on IRYS last week. I have my own money at risk. I have not been paid anything by the company.

Magic Jack (NASDAQ: CALL) - Let’s Have Another Look

CALL has just gone nuts, rolling through $20 without much problem as settling in around $23. Fantastic move, and I hope everyone clipped 400% off the call options I recommended.

It might be time to either buy a put, sell or call, or short this stock. Next Monday the company comes out with the 2011 year end audit numbers after the market closes.

Now, I have no idea how good the earnings will be, but here’s what I do know.

95% of the time, when a stock makes a big run into earnings, it blips up briefly after the release, then sells off as the hot money comes out on the news.

I see no reason why that pattern wouldn’t repeat itself here.

Tomorrow I’ll have a specific recommendation for a trade on a post earnings pullback.

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Hang Up on The CALL: Catch Me Live With iTrackr (OTC IRYS)

Catch Me Live and In Person

From time to time over the last several years I’ve made appearances discussing all sorts of market related topics on the Big Biz Show. The Big Biz show is a kind of irrevant stock market and business related TV show that is also streamed online. It started out on radio, but evolved.

Here’s how the show’s description:

“Thanks for listening and watching ”The Big Biz Show with Sully and Russ T Nailz” nationwide and coast to coast in 35 million cable television homes, and 150 radio stations in 175 countries via American Life Network, Biz Television, FOX Business Network, Armed Forces Radio Network, CBS Radio Network and The Business Talk Radio Network!”

The show has been broadcast every business day from 3PM to 5PM. Starting Monday, the show is moving to the new time slot of 12PM to 2PM eastern time.

Yours truly will be the co-host of this Monday’s first broadcast in the new time slot, so please tune in. I plan to talk about generating income from your stock positions by writing covered calls. Forget dividends- this is the way to go for investors seeking higher returns.

More importantly, the first of my “Big 3″ penny stock ideas is iTrackr Systems (OTC BB: IRYS). IRYS opened at $.68 this past Wednesday when I released the pick, and closed Friday at $.80. There’s been a volume explosion, and reasonable price movement of 17.5% in the first three trading days.

Tune in at 10:20 Eastern time to catch Jeremy Brooks, the President of IRYS, interviewed live on the Big Biz Show.

Rather than try to figure out where it might or might not be on your local cable system, you can watch it, or listen online.

Go to WWW.BIGBIZSHOW.COM on Monday morning.

Click on the button that says “Watch Us Live”, or click on “Listen Live“.

Time to Hang Up The Call

Any way you look at it, my recommendation to invest in the Magic Jack (NASDAQ: CALL) options has been a gigantic win. At the same time, I suggested the Dexcom (DXCM) options, and those were a break even, so no harm done there.

The March 15 CALL call options I recommended back on January 18th at $1.30 closed Friday at $6.70 bid- yielding at gain of 415%.

Time to hang up on the call. Anyone still holding those call options should sell them and close out their position immediately.

Those options will expire in two weeks, and the stock has run up very nicely into their earnings release. No matter how good the earnings, there’s a 90% chance the stock will briefly blip up then sell off after the earnings release.

Hang up on the CALL, take your 415%, and move on.

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“CALL GOOD To US”- Three Monster Pennies Coming

The “CALL” Has Been Good To Us

Mark it on your calender- the week of March 12th. My big win for 2012- the March 15 CALL options recommended in early January at $1.40 needs to be liquidated before that week. Here’s why.

This is a good one for your market experience “hard drive”- burn it onto your mental disc drive. When a stock runs up into an earnings release, 99% of the time it will sell off immediately after the news comes out. The one exception would be Apple Computer (AAPL)-the company absolutely blew away analysts estimates and the stock went up.

I called this perfectly on Baidu (BIDU) last week- choosing to suggest to subscribers at they sell covered calls against their position on the earnings news. Kaching- 65% gain in 3 trading days.

As you can see from the chart, the stock had traded up beautifully into earnings. The company beat the estimates by 10% on a strong top line, then the stock sold off 4 consecutive trading days before heading back up.

This happens when hot, short term money makes a bet on an earnings surge a month or two ahead of earnings, then looks to harvest profits when the news comes out.

In the case of the Magic Jack (CALL) Call options I recommended at $1.40- they are now trading at $3.50- down from their high of around $5. Today, it’s 150% return in 6 weeks- not bad.

Magic Jack (CALL) has announced it will release Q4 and year end audited results the week of March 12th. These options expire on March 16th. The time value is eroding on these options, and the stock will likely sell off after the news comes out.

Therefore, you would be well served to be out of these options by the end of next week of the latest, if not earlier. If the stock has traded up or remains close to the $20 level when the numbers come out, I will suggest a quick trade on the short side to take advantage of the inevitable sell off. If you see the stock approaching the $20 level, sell immediately. That will likely be the ceiling in the short term.

The First of a Blockbuster Trio

As alluded to in previous editions, I’ve been working on 3 incredibly strong penny stock opportunities, to be released consecutively over the next 3 months. These are a different breed of cat from the few hit or miss, quick trade ideas I’ve delivered this year.

On these 3 ideas, you will have a “First Look” out in front of millions of investors who will learn about these three ideas a week or two after you get the “first look”. There will be lots of follow up on these ideas.

I’ll be releasing my first “Monster Idea” next Wednesday, and you’ll want to be first to make a trade ahead of the rest of the world. Here’s a little preview:

Groupon (NASDAQ: GRPN) has been highly touted as the company to get to $1 billion in revenues faster than any company in history. I guess $1 billion in revenues ain’t what it used to be.

I believe the entire Groupon model is fatally flawed, and unless the company makes some changes, this ship is destined to sink. The market is catching on as well - the stock is now permanently camped below its IPO price.

There’s problems on both the user and merchant side. Speaking as a user, I can’t recall the last time Groupon notified me of any “flash sale” on any item I was actually interested in purchasing. Every day it seems like I’m bombarded with a myriad of offerings that include bikini waxes, yoga classes, and tanning beds. I have zero interest in any of those offerings.

On the merchant side, Groupon is getting the bottom of the barrel. When you “pre pay” Groupon for a 50% discount at a restaurant, Groupon keeps half the money, and sends the other half to the merchant in about 90 days. Therefore, only the most desperate of merchants are using the service in most cases.

Groupon does have the largest network, so there’s value in their ability to distribute. However, this model is doomed. Without adjustments, Groupon will go the way of many of the early entrants into explosive digital markets- does anyone remember Netscape, AOL, or MySpace? All early entrants with flawed models.

Move over Groupon- the first online site that creates a direct interface between consumers and local businesses is about to launch, and it will allow the consumer to reach out to local merchants and negotiate a discount in advance.

For example- you could pick 3 dry cleaners in your neighborhood, ask for a 25% discount between from any or all of the 3, then go wherever they will work with you. For me- this has value.

Stand by to learn more next Wednesday. I’ll have more early next week.

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One For Two This Week- Updates on CALL and FROG

FrogAds (OTC: FROG) did not jump for us as I had hoped this week, but hang on for a bounce. From $.30 to $.28 is not a big deal. I suspect $.25 will be support for this one, and you might be well served to file a limit order with a tight stop to hop back in at $.25.

I’m not sure we’ll get there, but if we do, that might be great level for easy money. The stock has not traded below $.24, so $.25 would be a great level to accumulate for the next bounce. Volume is coming down, which suggests the sellers are exhausted. The lower the volume from here forward, the more I like $.25.

Of the two options ideas I provided last week, one is just ripping to the upside, and the other is a break even. My Call on Call is climbing everyday, and this stock looks to me to have major upside potential even from here. It is clearly breaking out, and there are no sellers to be found anywhere.

CALL is the company that makes and markets the Magic Jack product you see advertised everywhere. $17 for a year’s phone service. Investors I know who follow the company tell me their new generation of technology is far superior to their first version, and as a result they are expecting Q4 and year end results to be very strong.

The stock is behaving as if institutional investors believe it as well. This scenario is what I call an “Event Driven Trade”. The event- a big earnings surprise to the upside. The trick- knowing how to trade it.

The key to trading a stock that moves much higher into earnings is to sell either just before the earnings release, or in the first half hour of trading after the earnings release.

Since the OTC Journal is committed to low priced stocks, I recommended the March $15 call options at $1.40. Today they are $2.25 for a gain of 60% in one week.

I don’t believe this stock has peaked. Any correction should be used as an opportunity to add to or open your position.