The Market Rips... Here's Some Tips and a Few Updates

Hope you're all having a good week! The markets are obviously having an excellent week and with the NASDAQ continuing to lead with new 52 week highs, it appears the S & P and the Dow are going to want to test their 52 week highs in short order. Will we see a pullback on the heels of that test of the Dow and S & P? Time will tell but for now we're convinced that the mid-term trend is favoring the bulls. This is great news for investors who have not been so concerned about our Government's aggressive monetary policy to turn things around by continuing to print money and bail out the not so responsible borrowers over the years.

Does that upset me? Sure it does. Don't pay your mortgage, no problem. Can't pay your bills, no problem. Can't find a job, no problem. We'll extend unemployment. Alrighty then. It's neither here nor there because the most important thing I've learned over the years is the market is always right. So, for now we're going to let the trend be our friend and position ourselves accordingly. Don't be stubborn. My point here is even if your ideals conflict with policies or you don't agree with why the markets continue to move higher, it really doesn't matter because it is what it is.

I had an interesting conversation with a small cap fund manager last weekend who put it pretty simply. With the government continuing to print money and keeping interest rates at historical lows, it's providing an economic backdrop that is promoting growth. Whether you agree or not, it's just what's going on... so go with it until proven otherwise. Additionally, one of the safest things you can do while playing the speculative part of the market is to own hard assets. Whether that be gold or real estate, both are a savvy hedge against our aggressive efforts to generate higher than average returns in small caps.

Thank You Wall Street - CALL Goes Nuts

Let's get with a few very important events that have taken place with some of our trading ideas and Featured Stocks over the last few days. Not in any particular order... VocalTec (CALL) received an "outperform" rating from Oppenheimer on Tuesday which became the catalyst for a huge run-up in shares of CALL. Good for us, eh?

We initiated coverage of CALL at under $15 only a few weeks ago providing SCN Members with a very handsome 33% return off Tuesday's high. Let's thank Oppenheimer for following suit on something we already knew before them. Love it!!

There's a few things I'd like to point out here while we're on the subject of run-ups and Wall Street Analysts. First, this just goes to show you the value of being a SCN Member. We work hard to try and bring you ideas that are going to start getting a lot of attention before the rest of the herd. Well, CALL finally starts getting Wall Street attention AFTER we uncovered this little gem. Second, don't buy the hype of Wall Street analysts, look at what the stock did the day after they issued an outperform? It gave more back the following day than it made the day of the rating issuance. Let me be more clear... I'm not saying CALL doesn't have more room to run. I'm saying don't jump in the day of a major Wall Street firm upgrade. Usually, they all pull back off of the irrational exuberance.

Lastly, when a daily chart gets very long in the tooth, it usually means it's time to take short-term profits and wait for the dust to settle before jumping in. I hope you took money off the table on CALL because now we have an opportunity to get back in which I think may prove prudent but let's see where it's at when the dust settles.

ChromaDex Announces Favorable Financing

Remember in one of our recent newsletters we talked about insider buying being such a simple and effective way of finding out when a stock might be on the verge of something very good? Well, the ChromaDex came out pre-open yesterday announcing that it has entered into a definitive agreement with investors in a registered direct offering of 9,533,333 common shares at a price per share of $0.75 for gross proceeds of approximately $7.15 million. In addition, the company has entered into an agreement with investors including several members of ChromaDex's management for the sale of 4,933,333 restricted shares of common stock at a price per share of $0.75 per share for gross proceeds of approximately $3.7 million.

That last sentence is the kicker for me. Insiders are willing to put their money with their mouth is. At first glance, investors probably are thinking that the financing being done at a discount to the market would be a negative for the stock but let me explain something here. Financings are rarely done at current market prices. The incentive to financiers usually comes in the form of a discount to the market along with additional warrant coverage and other incentives but this particular financing seems pretty straight forward.

This announcement as I read it appears very favorable to the Company and comes at a perfect time since it will likely provide the necessary funding to fund its marketing and growth prospects for its recently launched BluScience™ line to retail consumers.

Sometimes you have to read between the lines. The bottom line for me here is the market has digested the news and as far as I'm concerned it has provided an opportunity for investors to get into the stock at roughly the same levels as the financiers. All in all good if you ask me. If you've been following along, we clipped 100% returns on CDXC in a recent trade and if you used trailing stops you should have killed it. Now, here we go again. It appears opportunity for SCN Members with CDXC has presented itself again.

Anavex Doesn't Disappoint

Our latest Featured Stock, Anavex Life Sciences (AVXL), had a good start yesterday trading up on good volume providing SCN Readers with roughly a 10% gain in a single day. The stock has pulled back a hair today but sometimes that's to be expected. Now that we're in the money, let's not let a winning trade turn into a losing one. Make sure you follow your profits with a trailing stop that makes sense for you.

I suspect the stock is going to start getting more attention now that the it appears to be picking up momentum. A near-term move to $1.96 and a target of $2.46 wouldn't surprise. So far the stock is behaving as suspected. If you're looking for more opinions and information on the stock, the Stock HQ Hub for AVXL is now up and live here. There, you will find a PDF Report on the Company as well as articles and blogs from other SCN Contributors. Check it out there's a lot of great content there worth reading.

Let's stay on top of AVXL and see if it can provide the returns for our readers like many of our other recent ideas.

Rite Aid Not As Boring Anymore is It?

We issued a trading alert on RAD a while back and it continues to perform nicely for patient SCN Traders and Investors. The stock is breaking into new short-term highs every day recently rewarding our Members all the way up. Again, make sure to use trailing stop because ya never know. However, technicals are telling me the stock is headed for $1.78 which would be a nice 5/8 retracement from its move down which started back in September of 2009.

I still think the longer-term play here is a buyout but Rite Aid continues to pour on positive news. The Company came out this morning announcing sales results for January. For the four weeks ended January 28, 2012, same store sales increased 2.2 percent over the prior-year period. January front-end same store sales increased 2.7 percent. Pharmacy same store sales, which included an approximate 230 basis points negative impact from new generic introductions, increased 2.1 percent. Prescription count at comparable stores increased 1.6 percent over the prior-year period.

It's not anywhere near an Apple Earnings announcement but for a stock that has been beaten and battered for years, I suspect the worst for shares of RAD may be behind us but again, use trailing stops. I cannot emphasize that enough.

DexCom Also Winning

At the same time we brought you CALL, we also brought you DXCM and although shares of DXCM haven't provided us with quite the returns that CALL has, it has still provided a 12% return in only a few short weeks. That still beats the S& P on just about any given year.

The Company this morning announced that it has entered into a Development and Commercialization Agreement with Tandem Diabetes Care, Inc. to integrate a future generation of DexCom's continuous glucose monitoring (CGM) technology with Tandem's t:slim™ Insulin Delivery System, the first ever touch-screen insulin pump.

The PR goes on to say... "We are very pleased to work with Tandem to help people with diabetes live longer, healthier lives," stated Terrance H. Gregg, Chief Executive Officer of DexCom. "DexCom and Tandem share a common goal of bringing best-in-class diabetes care to our patients." "Through the development of t:slim™, Tandem learned that design and ease of use are critically important to people with diabetes," said Kim Blickenstaff, President and Chief Executive Officer of Tandem. "DexCom's future generation sensor adds to our portfolio approach of listening to people with diabetes and developing products that support their needs."

The markets seems to like it. I'd give one more good up day for shares of DXCM before we may see a little short-term resistance so keep an eye here as you may want to take your profits in hopes of a better re-entry.

That's it for today... questions, comments or feedback always welcome! Back at ya' in the AM.