Top of the morning to ya’ all! Looks like a three day weekend did the market some good. Maybe it allowed policy makers and the larger market forces at work to finally realize the good 'ole US of A is probably the best of the worst places around the globe right now to bet on stocks. This is excellent news for traders and investors looking for a new leg up in the major indexes. However, I’m still not so convinced this market is going to rip into new 52 week highs without some sort of decent head fake to the downside. As often as I’m right about index trading, I have been wrong on my fair share of occasions over the years.
Case in point, early last week I suggested some put options on the Q's and that didn't turn out so well but I'm pointing that out because when I made the suggestion I also made it pretty clear that if the market reversed and took out the previous day's high that would serve as a stop loss. If you listened to us on that trading idea, you would have lost a little but not much because before this market gapped up big today, it took out that high in reference slightly late last week. That was our exit and that's the importance of trading discipline.
Back to our take on the major indexes... currently, we've got the DOW, NDX and the S&P all butting up against their 52 week highs. The NDX is the strongest of the three. My educated guess is we'll test those levels at the very worst but that's where it's going to start to get very interesting. I've mentioned this in a few past editions as well but I've again included a monthly chart of the NDX to show you why we're getting very close to a critical point.
This monthly chart shows how the NDX has made higher lows on a monthly basis of late but it still continues to fail to breakout above its 52 week high. Call me crazy but it just looks too obvious to me that the higher lows and the chipping away of that high is going to allow this market to easily crack through that 2440 level and just keep rotating higher. When things look too easy in the market, that's generally a sign of something you weren't expecting coming. I'm still looking for a pullback off the test of the high, so let's stand pat trading the indexes for now and let the market play itself out over the next while. If I've got a good index trade on the table, you'll be among the first to know.
It appears our trading prowess has been serving us very well with our small cap ideas of late and it doesn't appear that's changing anytime soon. We've got a few key updates from some of our featured stocks we felt most definitely warrant coverage.
MFON Announces Another Multi-National Client
Last week CommerceTel (MFON) announced the signing of a major multinational quick service restaurant franchise adding another top tier client to their list while agressively growing their top line numbers along the way. Well, after a little digging we believe that client is Sonic. Sonic has been for years an industry leader and rivals the advertising and marketing prowess of other household names like Mcdonald's. Although that announcment is obviously a clear indication the Company is growing, I think it speaks volumes for their product offering. Getting a client like Sonic to commit on a national level not only tells us this Company is best-of-breed in their space, it tells us that they are on the very leading edge in the world of digital advertising.
If last week's endrosement wasn't enough to make believers out of you, today MFON fired again... in a good way. The Company announced pre-open they have signed another major multinational client but this time a major player in the oil and gas space. Again, they didn't reveal the client (probably weren't allowed to) but there's only a handful of these multinationals with this kind of footprint because MFON announced the client has plans to roll out mobile marketing services across their 10,000 retail food and gas locations in the U.S. of which the first deployment is expected to begin in February 2012 with a distributor operating more than 700 locations.
We'll find out who this client is as well. The bottom line here is I believe CommmerceTel is quietly killing it. The only drawback to this stock is it doesn't trade with the type of liquidity I'd like to see. It's a bit of a catch 22 because the spread (bid ask) is usually a bit too wide for most investors' liking but that's because there isn't a ton of volume yet. Sometimes, it's worth taking a shot on stocks like this even though it doesn't trade a ton of volume yet. I firmly believe early players in this stock will eventually be well rewarded.
I think this Company is for real and it's only a matter of time before the liquidty issue will be resolved. Look at Velti (NASDAQ:VELT). Personally, that's the best comparable I can find for MFON and MFON has a technology platform that VELT doesn't. SCN Contributors have beeen covering MFON of late as it's our job to try and find you small stocks before they become big. We've got all kinds of info on MFON for your consideration, it's all worth reading and deciding for yourself. I'd prefer teaching you to fish rather than giving you the fish, so peel through everything we have for you on MFON and see what you think? I'm a big believer in this stock. I've included an image here to represent how I feel about it. Can you figure it out?
Lone Star Retires Shares - Good for Demand
Another Featured SCN Stock hit the news this morning as Lone Star Gold (LSTG) announced they're going to retire 30 million shares in the coffers. In its simplest form, this does two things for the stock. First, it reduces supply which is always good for the long-term value of a Company. And, secondly, it provides a signficant vote of confidence in the short-term which may help the company attract additonal financing that would be more favorable to current shareholders. Here's a link to the PR in its entirety.
Although the stock hasn't traded so hot over the last few months, I think it's important I point out something technical I see shaping up nicely so far in recent days. First, let me point out that I've said on a number of ocassions the best time to own or trade a stock is when nobody wants it and LSTG has been that stock for a few months now. What I see shaping up here is the early signs of a very substantial reversal signal. The daily chart I've provided here shows capitulation to the downside three days ago, then subsequently rallied hard for the next couple of days and now has pulled back for a decent entry point.
For the traders out there, I think now's a good time to jump into LSTG for a nice trade. Set your stop around $.50 cents and see what happens. With as much negative momentum as this stock has had of late, the pent up move to the upside could be very profitable in a very short period of time. We'll see.
Let's take advantage of the short week and make some money!