As incredible as it may seem, despite the 2.3% tumble we’ve seen the PowerShares QQQ Trust (ETF) (NASDAQ:QQQQ) suffer over the last week and a half, the fund is still not in a heap of technical trouble…. at least not on the surface. If you look at the bigger picture of the underlying market though, things get a little more worrisome for QQQQ, and the NASDAQ 100 it represents.

The looming upside is support at an intermediate-term trend line that’s been in place since August’s low (blue). It’s been touched several times since then, and though the PowerShares QQQ Trust has moved under it once (in late October), it’s been consistent enough to add to the mix this time around. It’s currently at $45.13, and rising. The QQQQ’s, on the other hand, are at $45.49, and falling fast. So, we’ll have some sort of clue about that line’s support nature in about 36 cents or so. Don’t rule out the possibility of finding support and rebounding there, as unmerited as it may seem.

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As for the downside/risk posed by the NASDAQ 100 Trust, there are a few more items on the menu.

The first one is the taller bars (wider trading ranges) we’ve seen over the last few days. Don’t laugh - it matters. Taller bars tend to be seen at major reversal points, indicative of indecision and churning.

The other potential pitfall I see is in breath and depth, specifically for the NASDAQ, and most applicable to the QQQQ’s.

I’ve talked about breadth and depth before, Respectively, it’s an exchange’s advancer/decliner ratio, and an exchange’s advancing/declining volume. To immerse yourself in how I use it, check out this write-up from March of last year. Normally I exclusively use the NYSE’s data, but more recently I’ve found the NASDAQ’s to be a little more predictive. And of course, it’s much more relevant when considering the PowerShares QQQ Trust.

In any case, though neither the breadth trend nor the depth trend have actually turned bearish, both are on a crash course to do so. The ‘official’ switch to bearishness will come when the bearish lines (red) cross above the bullish lines (green).

On that note, I want to be clear about one thing…

Though I follow both data sets for all the indices, in the case of the NASDAQ Composite, the NASDAQ 100, the QQQQ, or whatever, I find the ‘depth’ data to be much, much more important (i.e. predictive) than the ‘breadth’ data. That’s only a NASDAQ tendency though; both data sets are useful for the NYSE or AMEX version o the analysis.

I make that point to address the next likely question - doesn’t the breadth data crossover system generate a lot of fake-outs? Yes, it does, which is why I tend to focus on the depth chart when trading the PowerShares QQQ Trust. I marked the two buys (green up arrows) and one sell (red down arrows) on the chart that would have stemmed from trading with the depth data. Though not perfect, I’ll take it. (It’s much better than the same technique with NASDAQ’s breadth data.)

It’s also not day-trading data… these are swing-trade types of moves being signaled.

As for the QQQQ’s should the support line and break, and should we get a bearish depth signal (and I think we will), I’m targeting a move back to the mid-$40 area. That’s a 50% retracement of the July/January rally, and also an area that’s been support before - in October and November.

More importantly, that fall would represent about a 13% dip from the high. Not that it’s a magic number, but ‘normal’ bull market corrections are usually on the order of 10% to 15%… and a correction is something the NASDAQ 100 - and the whole market - needs right now. Better to suffer a small selloff you can actually recover from than suffer a big one you can’t recover from.

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The SPDR S&P 500 ETF (NYSE:SPY) has just broken a seven-month support line. Though the relatively unharmful 1.7% dip today hasn’t unwound the bulk of the gains for that timeframe - or even the gains for the last couple of weeks - the weight of those gains has quietly been taking a toll on SPY. It just wasn’t clear until today that this risk was lingering out there. For that matter, it still may not be completely clear to some.

And what’s the breakdown exactly? The SPDR S&P 500 ETF fell under its longest-standing support line - the only purple one on our chart below. On the surface it may seem trivial, but all big pullbacks start out with one small step.

Looking ahead, there’s a confluence of support waiting for SPY around $110.70.  Both of those support lines are younger and less established though, so it remains to be seen if they’ll actually hold the market up - a question that’s made heavier knowing how overbought the broad market is at this point. At the very least though, we expect the SPDR ETF to test those lines. That’s about a $2.50 drop from here to there.

Though we didn’t plot it on our chart, SPY has an important Fibonacci retracement line waiting for it at $104.52. While a dip of that size sounds alarming, it would actually be a healthy, normal correction. Better to take a small lump now than a big one later.

By the way - and not that it matters much now - notice how the  SPDR S&P 500 ETF never once managed to move above the resistance line that was established back in September. That line may well (and probably will) come back into play for the SPDRs again at some point in the future.

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Charts of Insmed Incorporated, La Jolla Pharmaceutical Company, and Pacific Capital Bancorp are rated and reviewed.

I want to clarify right from the beginning that I’m not wild about one aspect of the three stocks we’re going to be looking at below. What’s the problem? All three are (in my view anyway) bullish setups. There’s nothing inherently wrong with that - particularly if the market remains bullish, or even tepid. I don’t like being so one-sided though, especially when the broad market’s this overbought. Nevertheless, here’s a look at Pacific Capital Bancorp (NASDAQ:PCBC), La Jolla Pharmaceutical Company (NASDAQ:LJPC), and Insmed Incorporated (NASDAQ:INSM).

With my first look at Insmed Incorporated (NASDAQ:INSM) way back on November 17th, I was speculatively bullish - a call founded on the fact that the stock had traded above a falling resistance line, and was moving higher on growing volume. It took a while to get going, but as of today, INSM is finally making good on that potential.

In the meantime I’ve added two horizontal resistance lines for INSM… or perhaps I could more accurately call it a resistance ‘zone’ between $0.80 and $0.83.  Either way, Insmed Incorporated blew through both of them today with the move to a high of $0.92. So, we’re up about 15% on our hypothetical trade. (Hopefully it isn’t just hypothetical for you.)

At this point though, I don’t know if Insmed Incorporated shares are at a great entry level. I’ve got a sneaking suspicion we’ll see INSM retest one or both of those resistance levels as support, meaning you’ll be able to get in at a better price than $0.89. I bring it up today just to let you know the bulk of the major bullish work has been done with the punch through the ceiling.

Pacific Capital Bancorp (NASDAQ:PCBC) may well be one of the biggest rebound opportunities I’ve seen in a while. You can’t see this on the zoomed-n chart I had to use below, but considering PCBC was trading in the $20’s not that long ago, this recent upswing has me curious.

Even without the huge upside possibility though, I’d like PCBC for its recent technicals. Since November we’ve observed horizontal resistance around $1.30, while a rising support line has kept shares of Pacific Capital Bancorp moving higher. In fact, that line was the springboard for today’s surge to $1.44.

That move was clearly above the big resistance line, but Pacific Capital Bancorp did NOT hold those gains; they fell back to $1.25 instead. A problem? I don’t really think so… not yet anyway. The volume was strong today, and I’ve got a feeling PCBC will get and stay above that ceiling soon enough. Once it does, yes, it’s a strong buy.

Though it’s not really an issue just yet, the recent rebound from La Jolla Pharmaceutical Company (NASDAQ:LJPC) could make it an issue pretty quickly. So, here’s a pre-emptive trading perspective on LJPC.

In short, there’s a lingering resistance zone between $0.32 and $0.34 that could still halt any rally effort from LJPC in its tracks. How do I know? Well, nothing’s ever certain, but we’ve seen this ceiling stop rallies five times (out of six) since this time last year. Eventually, La Jolla Pharmaceutical shares will snap the losing streak - I just don’t want to be a guinea pig in the effort to find out which attempt will be the successful one.

My apologies for the scrunched-up chart below… I wanted to show you all the times that resistance had thwarted La Jolla Pharmaceutical Company strength before. I do think it’s reasonable to assume LJPC will manage to move from the current price of $0.22 towards $0.32 or so. Based on the long-standing history though, I have little to no confidence beyond that.

That being said, if and when from La Jolla Pharmaceutical does manage to crack the ceiling, how big of an upside could that be? Wow! We’ll talk about that when the time comes.

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A technical look at Peregrine Pharmaceuticals, Antigenics, and MultiCell Technologies.

Stocks are getting hammered today. Yet, our focus on the smaller end of the market cap scale continues to find ideas equally on both sides of the fence. Our latest installment to that end includes technical looks at Antigenics, Inc. (NASDAQ:AGEN), Peregrine Pharmaceuticals (NASDAQ:PPHM), and MultiCell Technologies, Inc. (OTC:MCET). Here’s a better look at each.

Actually, I don’t have much of a technical outlook for MultiCell Technologies, Inc. (OTC:MCET). I only have a minor one that may be a bit meaningless in the grand scheme of things. Still, MCET has me curious.

Technically speaking, MCET broke through a falling resistance line in December. Since then it’s gone flat. While that’s not bullish, it’s often a precursor to bullishness. If MultiCell Technologies managed to move above $0.015, I may even be interested in buying it. There’s something odd about the whole thing though…. we’ve not heard a peep from the company since August, yet the stock is creating quite a buzz in the underground investment community.

Could something be going on with MultiCell Technologies that’s been leaked but not officially released? Possibly. That would certainly explain a lot. I don’t know what it is though. Maybe one of our readers can chime in below (with something legitimate). In the meantime, the overnight - and one night only - sensation we saw MCET become in August may end up being repeated soon. It’s been a pattern with this stock since 2006 when we first started covering it.

I know nothing of the fundamentals for Antigenics, Inc. (NASDAQ:AGEN). And frankly, I don’t even really care - I can’t imagine owning it long enough for them to really matter to me anyway. All I know is AGEN is moving higher now, and has a ton of room to go…. with a gap to be filled, to boot.

AGEN broke through a falling resistance line three trading days ago, and hasn’t looked back since. The buying volume has been growing too. Both are bullish clues, and by themselves would be enough to make me an Antigenics, Inc. fan.

The exciting part of this chart is the potential degree of recovery that Antigenics has in front of it. There’s a support line at $2.00, with the upper edge of the gap at $2.08. There’s really no other ceiling for AGEN in between here and there though, meaning the stock could truly make that Herculean move.

It’s a total speculation, but one I think that’s favorable from a risk-versus-reward perspective.

Good news and bad news for those of you who are trading Peregrine Pharmaceuticals (NASDAQ:PPHM). The good news is, a floor has been well defined. That bad news is, PPHM is just peeling back from an equally-defined ceiling. If the pattern holds up, the stock’s on course for a 22% dip.

The chart of PPHM below says it all. We’ve got four nodes now tracing the slightly-falling resistance level [the fact that shares reversed after yesterdays peak should be no surprise], and we’ve got horizontal support at $2.56… a line that’s been tested five times since May. At this point, I think we have to take the obvious framework at face value with Peregrine Pharmaceuticals.

Just for the record, the gap from May has been filled. Peregrine Pharmaceuticals shares traded under it for a few ticks back on October 16th, but that was enough to relieve any undue selling pressure. The selling pressure we’re seeing now is 100% due to the stock’s trading range. In any case, I’d be a seller of PPHM here, and a buyer around $2.56 just as long as I was seeing upticks or support around there.

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Though off our watchlist for some time now, I’ve continued to keep tabs on Applied DNA (APDN). The opportunity has always been there - the company was just trying to get the revenue ball rolling at what ended up probably being the worst time imaginable… in the middle of the recession. Now with economic daylight in site though, this week’s PR is a great reason to revisit the company.

Quick reminder… Applied DNA is essentially an anti-counterfeit company. Its technology - custom-built botanical DNA strands - can be used to determine if everything from wine to DVDs to clothing to documents are counterfeit or legitimate. How so? The wrong DNA means it’s a sham product, and the test that determines if it’s the right DNA or not is of forensic quality. In fact, Applied DNA’s ant-counterfeit technology has held up as evidence in court cases, being the ultimate reason for a couple of convictions.

Anyway, Thursday’s news is another feather in the company’s cap. Though names weren’t mentioned (to maintain as much security as possible), Applied DNA announced it had garnered another customer looking to use its anti-counterfeit labels. We do know the brand was considered to be a luxury name headquartered in Europe.

Add it to a growing list of organizations that have been brought on board since we started coverage of the company about three years ago. Yes, even while the bulk of investors have been distracted by swine flu, an election, a stimulus/bailout, and the debate over whether or not we’re actually out of a recession or not over the last year and a half, Applied DNA has been adding revenue sources.

And, the result has showed up on the income statements. The company drove twice as much revenue in fiscal 2009 as it did in 2007…. and that was in the post-recession, worry-riddled period.

It’s 2008, however, that points to the potential here. The company more than quadrupled 2007’s top line in 2008. How? Think about the timing. Though the recession had technically started then, very few realized or believed it. Businesses were still making capital expenditures and investments. If the economy can restore that kind of environment, I have to wonder if Applied DNA can restore 2008’s numbers. The momentum and technology are certainly proven and marketable.

Anyway, here’s the news from Thursday. I think it’s worth a look, but I think an even more interesting story is a review of the company’s progress from an idea just three to four years ago, to a company that’s looking at a renewal of the huge growth we saw in early 2008.

Bottom line? It may be time to put APDN back on the radar as a long-term recovery play. Comments, thoughts, and related ideas are welcome below.

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AllianceBernstein Holding LP, MFA Mortgage Investments, Discover Financial Services, and Knight Capital Group are the sector’s best prospects for the coming year.

The entire financial sector will go down as 2009’s Cinderella story, but next year won’t be as easy when it comes to making money with the industry’s stocks - careful selection will be needed. To that end, consider Knight Capital Group Inc. (NASDAQ:NITE), Discover Financial Services (NYSE:DFS), AllianceBernstein Holding LP (NYSE:AB), and MFA Mortgage Investments (NYSE:MFA) your best investment bets from the group in 2010. Here’s why.

Discover Financial Services (NYSE:DFS) has been rocked twice in the last three months, but has managed to survive both times. And why not? Credit took a shot on the chin, but veteran traders - and veteran humans - know it’s only a matter of time before consumers are up to their eyeballs in debt again, burning up their credit cards. The forward-looking P/E of 11.0 may be too timid for Discover Financial Services, and DFS is gearing up for the next round of rally.

Knight Capital Group Inc. (NASDAQ:NITE) is undervalued, plain and simple. The stock was crushed in October, plunging from $23 to a low of $14 in a move that was way over-exaggerated. The market’s starting to find its mistake with Knight Capital Group though; the stock’s made a nice push in December. Once the buyers regroup, they may find NITE is on its way from $15.46 to $22 again, as the forward-looking P/E of 9.7 is about 50% too low. The company never slipped into the red last year, if that tells you anything.

The September/November pullback from MFA Mortgage Investments (NYSE:MFA) is now being wiped away again, with the stock starting to make higher highs and higher lows. Thus, the dip is actually a buying opportunity for MFA Mortgage Investments. Yes, the mortgage business is shaky; it’s not non-existent though. MFA packs some nice margins, a low valuation, and few believers…. the contrarian trifecta.

AllianceBernstein Holding LP (NYSE:AB) may be the biggest turnaround story of the four we’re looking at. Once at $95, the current price of $26.79 leaves nearly 300% worth of recovery potential ahead of it. And, it’s heading that way as well…. the strong uptrend from earlier in the year is resuming. AllianceBernstein Holding has the results to back it up too. AB isn’t the cheapest stock around, but as the economy rebounds, we’re already seeing the company rebound even more.

Just for the record, these stocks were initially identified using a combination of technical, fundamental, and cyclical criteria. Other stocks - though not many - qualified to be in the ‘top pick’ list. These were specifically chosen for the addition, non-measurable qualities that are common with many top-performing stocks.

Bear in mind, however, that AllianceBernstein Holding LP, MFA Mortgage Investments, Discover Financial Services, and Knight Capital Group are all intended to be long-term picks… held through good times and bad for at least a year. It will take that long for the value to be fully realized. It’s worth the wait though.

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KEMET Corporation (OTC:KEME) has been in jeopardy of a breakdown since late October. After rallying (too strongly) to a peak of $1.61 by then, the stock fell to a low of $1.02 later in the month. At the time, many assumed that was just a bit of a humble reminder for the overconfident buyers from the prior four months. Over the last seven weeks though, KEMET Corporation has made it clear that the sellers are multiplying a lot faster than the buyers.

Today’s dip under a key support line for KEME could end up being the proverbial that breaks the camel’s back.

The support line is at $1.22, where KEMET found lows several times in November and the fist half of December (the horizontal blue line. Monday’s close of $1.19 clearly breaks that floor; the high-volume for Monday’s selling just ices the cake…. as does the lower high we saw made in early December (traced by the declining blue line).

Here’s the daily chart, for purposes of detail. It’s not the only worrisome chart for KEMET Corporation though…

Now take a look at the weekly chart of KEME. We’ve got a bearish MACD crossunder that’s completely undeniable, and we can also see the accumulation-distribution line is falling… hinting at a distribution (selling) trend.  The breakdown of support is still clear here as well.

What the weekly chart also does is just how vulnerable KEMET shares to a pullback after a two-week pop in July; there was no real progress after that, and the market knows it. Nervous investors are turning into profit-takers, and likely at a faster rate in the very near future.

As for target levels, I didn’t plot it on the chart to avoid a mess, but there’s a big Fibonacci retracement level at $0.90… the 61.8% retracement line. I don’t think that’ll be enough to halt the pullback brewing here though. I think the support area around $0.45 is a much more realistic projection.

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Technology stocks Hewlett-Packard Company, TriQuint Semiconductor, GT Solar International, and STEC are named as 2010’s best opportunities.

It may not be a complete portfolio, but they sure can make for an important piece of one. We’re talking about technology, and if you’re looking for one (or more) tech names to round out your portfolio for 2010, may we suggest STEC, Inc. (NASDAQ:STEC), TriQuint Semiconductor (NASDAQ:TQNT), GT Solar International, Inc. (NASDAQ:SOLR), and Hewlett-Packard Company (NYSE:HPQ)? Here’s a closer look at each one.

Two words come to mind when you think of Hewlett-Packard Company (NYSE:HPQ) as a tech pick for 2010…. ‘boring’, and ‘predictable’. We deny neither, but it doesn’t change the fact that Hewlett-Packard has still managed to consistently squeeze out profitable revenue from the low-end computer and high-end consumer printer market. We expect the company to really tap the improving consumer mood in the coming year.

Normally the kind of strong run we’ve seen from Hewlett-Packard shares would prompt skeptical investors to steer clear; HPQ is up about 100% since March’s low, bringing it in line with all-time highs from late 2007. But, the current valuation is still justified and sustainable.

Though not by leaps and bound, Hewlett-Packard has topped estimates by a penny in the last tow quarters. No big deal? Maybe, but with a P/E of 16.1 coupled with the fact that the company remained profitable every quarter during the recession makes it hard to say the company’s not nailing it. The forward-looking P/E of 10.6 is cheap, and may underestimate the potential here.

One thing is clear… the market loves to hate STEC, Inc. (NASDAQ:STEC). However, there’s something else that’s clear - the market lives to talk about the company. That can be a short-term challenge, but if the buzz lingers long enough, the truth will eventually come out. And the truth is, STEC, Inc. is a great company despite the stock’s recent chart.

Margins? At a net of 15.3%, STEC has ‘em. Decent price? There’s nothing excessive about a current earnings multiple of 13.2. And the future? The projected P/E of 6.4 is plausible for STEC Inc., in the shadow of three straight earnings beats.

Yes, the chart’s a mess, but STEC Inc. is doing everything they’re supposed to be doing. The stock will come around eventually; this is one to keep on your radar.

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TriQuint Semiconductor (NASDAQ:TQNT) shares paid the price for too much of an unsupported runup in the first half of the year, retreating from a peak above $8.00 back in October to a low of $5.05 in November. It looks like the stock’s righted itself again though.

The key to the rebound was the support found at the 200 day moving average line (blue). TriQuint Semiconductor shares have been making higher lows over the last four weeks because of it. That could be the start of a bigger move…. one that’s supported by results.

The big attraction to TriQuint Semiconductor, however, is the turnaround story currently in motion. The company’s in the red for the last twelve months, but has flipped to profitability in the last two quarters. Most investors may not have realized that yet though, since a snapshot of TQNT still doesn’t look positive. That’s the opportunity.

GT Solar International, Inc. (NASDAQ:SOLR) has been on the radar for a while, but didn’t get over a long-term technical hump until last week. Now that it has though, there’s a light at the end of the tunnel.

The trigger is the move above a falling resistance line. More importantly, GT Solar International made the move on higher volume. Though normally this kind of move on a daily chart would signal only a short-term swing trade, in this case, SOLR has what it takes to spur the stock higher for a while.

Bottom line - GT Solar International shares are cheap. If the company earns the expected $0.22 this quarter and the expected $0.57 next year (both very do-able), the projected P/E of 9.7 makes it a bargain. In fact, GT Solar has a shot at topping estimates. Solar is back en vogue again.

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12/14/2009

A Technical Look at Trident (TRID)

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— SmallCapNetwork Editor @ 2:47 pm

I talk about a lot of ideas over the course of the day, but some of them I like more than others. One of the ones I particularly liked today was Trident Microsystems (TRID). It’s only a conditionally bullish affinity, but if a couple of minor hurdles can be crossed soon, I suspect Trident Microsystems shares could move higher in a hurry. Let’s take a look.

There are actually a few different things going on here, the most important of which is the slightly-rising support line that Trident pushed off of in early December… for the second time in two weeks. It’s the same support line that extends back to June and July. To see it hold up again after this much time says a lot. However, it’s not enough in itself to get fully bullish on TRID.

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The resistance line I’m watching is the horizontal resistance line around $2.00. If Trident Microsystems can hurdle that level, yes, I can see a repeat of August’s runup. That’s not a guarantee, but it’s a high odds, low risk possibility.

By the way, I’m not entirely surprised TRID is finding a little indecision here. The black line on the chart is the 200 day moving average line (the grand-daddy of all moving averages), and it’s pretty clear it’s been a hot-button for Trident Microsystems shares now that it’s being revisited. If the chart can use this waffling as a wind-up/slingshot kind of setup, the move above $2.00 should be big.

Anyway, I just wanted to bring it up and put some focus on it, as it’s a compelling setup. So far, it is NOT trade-worthy. If it does move into position though, I think the risk/reward ratio with Trident is very favorable. Just wanted to give you a heads-up before the fact.

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12/7/2009

Chart Outlooks for CYCC, EDWY, and MJN

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— SmallCapNetwork Editor @ 3:28 pm

Technical looks at Mead Johnson Nutrition, eDOORWAYS Corporation, and Cyclacel Pharmaceuticals

It wasn’t too difficult for the market to turn a positive day into a neutral one, underscoring just how little progress stocks have made (in either direction) since the middle of last month. To make any short-term money, traders have had to dig deep into the market’s stocks to find movers like eDOORWAYS Corporation (OTC:EDWY), Cyclacel Pharmaceuticals Inc. (NASDAQ:CYCC), and Mead Johnson Nutrition CO (NYSE:MJN) appear to be. Here’s a closer look at each.

I’ve been really surprised about how many people have remained bullish on Mead Johnson Nutrition CO (NYSE:MJN) over the last two months. I think all the tell-tale bearish signs are there.

First and foremost, we see a string of lower highs… and not just because of the stupid surge in late September. Every major peak from MJN since hen has been lower than the last. And, we’ve seen a couple distribution days since then, with the most recent one being Monday.

I think there’s an argument being made that support lies ahead for Mead Johnson Nutrition at $40.78. I can see it. It’s also been resistance (August, September), so the line means something. I just think the lower lows and heavy distribution from MJN mean more. If you want to wait until Mead Johnson shares break $40.78 though, that’s not crazy.

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It was only a few days ago I tuned bullish on eDOORWAYS Corporation (OTC:EDWY). Though I still think there’s a tin of upside potential here, I think a recent chart development has put the whole thing at risk.

After breaking above the resistance at $0.051 that I discussed on the 17th, we did indeed see a nice rally from EDWY. Then as I figured on the 27th, we were due for a pause. Sure enough, we got it. While that was all part of the basic road map for eDOORWAYS Corporation, I don’t like the way the stock has persistently tested support at $0.07 since early last week.

If it weren’t so precise I wouldn’t care. There’s something about eDOORWAYS with that level though. My fear is when/if it snaps, EDWY could be launched lower like out of a slingshot. It’s at least time to raise the stop, and I also encourage you to keep a close eye on any bullish trades until we see higher lows again.

And finally, Cyclacel Pharmaceuticals Inc. (NASDAQ:CYCC) once again failed to do anything with a tepid breakout effort. If history repeats itself, that’s more bad news for current owners.

The clues are all there. Namely, Cyclacel Pharmaceuticals has just made yet another lower high by hitting a falling resistance line with Monday’s peak of $1.01. Then, the sudden move back to $0.84 carried CYCC well under Friday’s low, completing what has turned out to be a major outside reversal (bearish) bar. The selling volume hasn’t been light either.

I can’t help but wonder now if Cyclacel Pharmaceuticals really is so much into the pattern that traders have been ‘trained’, and expect )and trade) it so decisively that it’s created a self-fulfilling prophecy. You rarely see it to that degree, but CYCC may be one of these rare cases that’s truly zig-zagging lower because it has done so before.

If you’d like to know of any changes in our opinion of EDWY, MJN, and CYCC, be sure to Sign-Up for our FREE weekly Small Cap Network Newsletter TODAY! Identify quick changes in current market activity and receive timely trading ideas aimed at maximum ROI. Click Here to learn more…

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11/4/2009

Vonage (VG) On the Verge - A Technical Outlook

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• Hot Stock Picks and Trading Ideas

— SmallCapNetwork Editor @ 10:49 am

A few weeks ago I posted some not-so-optimistic comments on Vonage Holdings Corp. (VG) following what I felt was an excessive runup in the share price that really wasn’t yet supported by the news or underlying results. Some agreed, some didn’t… welcome to investing (or trading, for me).  Not a lot has changed since then in terms of share price, though Vonage seemed to have an easier time making rallies than it did the dips. Today’s 22% plunge from VG, however, has put the stock dangerously close to a breakdown trigger again.

The key here for Vonage shares - for better or worse - is the support line around $1.31. Today’s low (so far) has been $1.37. That’s not exactly teetering in the edge, but it’s close. The downward momentum is accented by higher than average volume… an alarming number of sellers are bailing out of VG on what is, quite frankly, nothing all that terrible.

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From here the course of action is to wait. The stock could rebound tomorrow, rendering these comments meaningless. If Vonage pittles around here though, and stumbles under $1.30, I can see a firestorm of selling unfolding. Like I said above, the underlying fundamentals don’t really support a price of $1.37 yet, and the market seems to be figuring this out.

As for a target, I don’t have one. I do think Vonage is one of those stocks that’s quick to find support and sympathy buying though, so I’d personally be inclined to take a quicker profit following any significant plunge. Keep your powder dry in the meantime though.

If you’d like to know of any changes in our opinion of Vonage (or if we officially recommend it as a trade), be sure to sign up for our free newsletter today. It’s delivered weekly.

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10/30/2009

The Trade That Almost Was - Tootsie Roll (TR)

Filed under:

• Hot Stock Picks and Trading Ideas

— SmallCapNetwork Editor @ 11:49 am

When I published our weekly newsletter a couple of hours ago, I did not mention a very ‘close second’ to our long pick for the week. I think it’s worth mentioning now, however, that Tootsie Roll Industries Inc. (TR) could have just as easily been our choice for a bullish play. Here’s why.

I didn’t show it on the chart we used for Teleflex, but the same trading system that found that stock also identified Tootsie Roll shares as a potential buy. I don’t share details of our proprietary trading systems and scans, but like I said in the newsletter, we’re looking for a very particular scenario where both volume and momentum are accelerating…. which can take weeks to identify in many cases.

My one problem with the TR chart was nagging resistance at $25.36 as well as $26.10. The stock is chipping away at the lower of the two right now, while the upper one remains untested for the time being. Had Tootsie Roll actually been at or above $26.10 earlier today, I would have suggested it then rather than talk about it here.

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So why am I bringing it up at all then? This is one of those cases where I have a hunch (which I rarely trust) about something…. I have a hunch this buy signal from TR is a good one that just hasn’t gotten much traction with yet.

That being said, there was another reason I opted to not go with TR…. tomorrow’s Halloween.

Huh? Though I know for a fact that candy stocks tend to do well before and around Valentine’s day, I’ve never actually observed the phenomenon with Halloween. I wonder if that’s what’s going in with Tootsie Roll. I don’t think it is, but it costs me nothing but time to find out for sure.

In any case, I like TR right now as well; don’t be shocked if it too becomes an official pick. Be sure to sign up for the free newsletter to find out when or of we pull the trigger on TR shares.

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10/28/2009

Breadth, Depth Turn Bearish for SPDR S&P 500 (SPY), NASDAQ 100 (QQQQ)

Filed under:

• Current Market Calls
• Hot Stock Picks and Trading Ideas
• Street Smarts

— SmallCapNetwork Editor @ 9:35 am

If you’re a fan of trading the SPDR S&P 500 Fund (NYSE:SPY), or any index vehicle for that matter, you may want to put your bearish hat on. It’s no secret that the market’s been sinking for the last few days - we’ve seen plenty of ebb and flow since March. What traders may not realize yet, however, is that index funds like the SPY or the PowerShares QQQ Trust (NASDAQ:QQQQ) just fell under some crucial support lines today. It could get uglier before things get better.

Here’s the most critical part of our bearish forecast for QQQQ or SPY though - it wasn’t exactly the charts of the exchange-traded funds that are leading us to a near-term bearish view. It was the NYSE’s and NASDZAQ’s breadth and depth that prompted the outlook.

It was only last week we pointed out that, though the market had been rising, the number of stocks participating in the rally (the ‘breadth’) was actually sinking. Moreover, the volume behind the gains (the ‘depth’) was also shrinking. Stocks were still pointed mostly higher, but underlying support for the rally was crumbling fast.

That’s how we knew SPDR S&P 500 Fund and the PowerShares QQQ Trust were essentially on borrowed time; today the price is being paid.

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As for how we interpret breadth and depth data, we explained that in detail with last Friday’s newsletter, though we explained in tremendous detail a long, long time ago. (If you’re looking for a powerful market-timing tool to add to your arsenal though, studying our technique would be time well spent.)

At any rate, a quick comparison of today’s NYSE breadth and depth chart to last Friday’s breadth and depth chart (same chart, just updated data) plotted along with the S&P 500 illustrates a bigger-picture shift to bearishness that we’ve not seen in months. All the breakdown signals are marked in yellow. Be sure to compare the two charts - you’ll clearly see the breadth and depth trends have remained bearish long enough to turn the tide and actually generate bearish crossovers on both fronts. [Note we use the NASDAQ breadth and depth data for the QQQQ’s. though we didn’t show it here.]

And just so you know, both the QQQQ and the SPY broke under the equivalent support lines that we marked for the S&P 500.

To answer the next question, yes, we know the technique gave us some errant signals in July, but the market didn’t break under a support line then. Now we’re getting a breakdown of support at the same time the breadth and depth tide has turned.

There are several ways to play this…. put options, shorting the ETFS, and others. The easiest though - if you agree that things just turned bearish - would be to tap one of the leveraged inverse index funds. Think about the ProShares UltraShort S&P 500 ETF (SDS), or the Rydex Inverse 2x S&P 500 ETF (RSW). No margin or option-approved accounts are needed for either.
If you’d like to know of any changes in our opinion of QQQQ or SPY (or if we officially recommend them as trades), be sure to sign up for our free newsletter today. It’s delivered weekly.

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10/23/2009

Heathrow Natural Food (HRNF), Western Lithium (WLC), Canada Lithium (CLQ) on the Hot Seat

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• Hot Stock Picks and Trading Ideas

— SmallCapNetwork Editor @ 1:17 pm

A day like Friday leaves most people wondering if there were any stocks that managed to make gains to close out the week on a positive note. As we’ve always said though, a really great stock will find a way to overcome a bearish tide…. perhaps a stock like Heathrow Natural Food and Bev. Inc. (OTC:HRNF), Western Lithium Corp (CVE:WLC), or Canada Lithium Corp. (CVE:CLQ). Two of those three are up today, after all, resistance to the selling we’re seeing in most of the market’s corners.

Is that strength something investors need to pay particular attention to? Maybe. Take a look.
Heathrow Natural Food and Beverage was actually mentioned to us by one of our readers as a suggested idea. He wrote….

Is anybody in your company tracking HRNF [Heathrow Natural Food and Bev. Inc. (OTC:HRNF)]. It is reporting great growth and is expecting to soon introduce a chewing gum that has antitoxins.
Regards

(name removed by editor)

Thanks for the e-mail. (By the way, we remove any information that might be identifying. If you’re ok with not being anonymous, feel free to post a comment ion the blog or at the community.) To answer the question, no - nobody’s following Heathrow. We’ve never even heard of it. Though a little off-the-wall in terms of product, it sounds interesting.

We’re going to open HRNF up to our readers and see if they have any thoughts or important information. If you’ve got something worthy to add to that discussion, please chime in below.

As for Canada Lithium and Western Lithium, they were also suggested by a reader e-mail…

Hey, I’m (name removed by editor). Check out Western Lithium Corp (WLC) on the tsx and Canada Lithium Corp (CLQ) also on the tsx (Toronto exchange). I’m sure you know the transportation world and energy storage infrastructure will continue and eventually be completely taken over by lithium and ultracapacitors. These companies, if you do your research, have great leaders, actual proof of high quality deposits and advanced stages of development, and the empirical proof of a growing industry. I’m only a 21 year old (school name removed by editor) student. I do my research, make sound decisions, and never take an irrational risk. I’ve put money and will bank on these two cheeaaaaaappppppp companies that will control the North American lithium supplies. PUSH IT BABY PUSH ITT!!!!!!!

(name removed by editor)

P.S. Please don’t make this a pump and dump. These are two great companies with cash and a future.

Thanks for the e-mail and ideas. We don’t follow many Canadian stocks, though you’re right - Lithium is the future, though it’s a distant future. For that reason, maybe we should look towards our northern neighbors for opportunities, since there are next to no U.S. stocks with that kind of exposure.

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Anyway, one thought - you do realize the “PUSH IT BABY PUSH ITT!!!!!!!” and the “Please don’t make this a pump and dump.” are totally at odds with each other, right? [I’m just having a little fun with you…. I know what you mean by it.]

We’ll do the same for Canada Lithium and Western Lithium that we did for Heathrow Natural Food. Since we don’t know much about them, we’ll open the topic up to our readers and solicit their help. Does anybody out there have any pros or cons regarding either company?

It should go without saying, but just in case….blatant self-promotion and disrespectful comments will be ignored; legitimate ones will be approved.

With that, the floor is open.

If you’re not a subscriber to the free Small Cap Network newsletter, this is what you missed today. Don’t let another money-making idea pass you by - subscribe today.

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10/20/2009

NeoMedia (NEOM) Makes Good on Breakout, But Too Fast - Time to Scale Out

Filed under:

• General
• Hot Stock Picks and Trading Ideas

— SmallCapNetwork Editor @ 11:43 am

Figures. We felt fortunate to find NeoMedia Technologies (NEOM) at the beginning of its upturn, attracted by its well-paced move higher as of October 14th. Rather than just quietly ride the trend higher though, today’s 40% surge is forcing us to turn our intermediate-term trade into something with a much shorter duration. Yes, that’s right - NeoMedia technologies is overbought, and ripe for a short-term dip. Here’s how we’re handing it….

First and foremost, we’re not complaining. We suggested NeoMedia shares on the 14th when they were trading at $0.142. At the current price of $0.20, our readers are up about 40%. We’ll take it.

Our grumbling is simply that the chart’s over-extended now, which puts the entire uptrend at risk. Sustainability is the key. The pace we saw then was sustainable. Today’s pop, however, isn’t sustainable, and may end up acting as a ‘final hurrah’ for this leg of the chart.

————————————————
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Commentary and Trading Alerts on NEOM.
————————————————On the flip side, the rising support line is still intact, and the volume is clearly favoring the bulls. In other words, don’t freak out just yet.

We advocate the hedged approach…. sell some now and lock in a short-term profit, but keep the rest just in case NEOM settles down, retest that bullish support line, and resumes its uptrend again. Just think of it as the best of other worlds. Of course, if NeoMedia Technologies shares slip under that support line, that’ll be the time to dump the remainder of what you own and enjoy the small profit on the entire trade.

All in all it’s not what we were hoping would happen, but that’s trading - a small win that could have been a big win is sure better than a loss any day of the week. If we continue to find enough of these high-potential, low-risk trading setups like the one we found with NEOM, enough of them will pan out to our advantage.

The best and only way to get our official trading alerts, for free and in real time, is to sign up for our free e-newlsetter. Don’t worry…. it’s only delivered a couple of times per week, and we only need your e-mail address.

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10/16/2009

What’s Next for Spectrum Pharmaceuticals (SPPI)?

Filed under:

• Hot Stock Picks and Trading Ideas
• Street Smarts

— SmallCapNetwork Editor @ 11:31 am

Though we strictly adhere to a policy of not offering individual advice (for regulatory as well as feasibility reasons), in cases where sharing our thoughts with everyone is educational and broad in its scope, we don’t mind answering some questions with our opinion…. like the one we got today regarding Spectrum Pharmaceuticals (SPPI). Our reader writes….

I OWN SPPI STOCKS AND FIND IT PIERCED THROUGH YOUR BOTTOM OF 4.78! ON CHARTS. WHERE NEXT? — ‘IYEEKS ‘ AS YOU SAID!

Thanks for the note. A little background work may be in order for everyone to fully appreciate our answer. The discussion the note references was actually posted last Friday after SPPI broke under one key Fibonacci retracement line, and tumbled (gapped, actually) all the way to the next one at $4.80. If the $4.80 one broke as well, then Yikes! indeed.

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Well, yikes. As you can see from the chart below, the floor at $4.80 broke in the meantime, and Spectrum Pharmaceuticals shares are now trading at $4.67.

As far as the ‘where next?’ is concerned, we don’t even really have a strong idea yet. The fact that SPPI can’t get back above the Fibonacci line at $4.80 isn’t a good sign… that’s for sure, but it’s still working on getting back over the hump.

From my perspective, it’s too soon to give up on Spectrum simply because (1) you’ve already ridden it this low, and (2) it’s trying to recover. If SPPI rolls over again though, and makes a low under yesterday’s low of $4.35, that’s likely to be a strong sign that things are poised to get much worse before they get better. In the meantime, I’d say the chart’s in limbo.

The bigger lesson that Spectrum Pharmaceuticals has taught us here is simply to use and be aware of Fibonacci retracement lines. They’re not perfect, but when used in conjunction with other tools they can really improve your trading odds.

If you’re not registered for our free newsletter, this is what you missed today. Don’t miss out on any more money-making opportunities… subscribe today. 

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Reader Trading Idea - Short Scotts Miracle Gro (SMG)

Filed under:

• Hot Stock Picks and Trading Ideas

— SmallCapNetwork Editor @ 10:54 am

As we’ve said before, we’re open to hearing any of your legitimate trading ideas. Just let us know by sending them in with a reasonable argument. We got one such e-mail today from a reader who made a pretty valid case against (bearish on) Scotts Miracle Gro (SMG). He writes…

I have alot of respect for your work and would like to bounce a trading idea off you. I believe that Scotts Miracle Gro (SMG) is a good short candidate. They report earnings before the bell on Oct 26. Let me make my case:

• (1) Weather: unseasonably cold weather early in the fall should not help their business late in quarter or guidance going forward
• (2) Earnings estimates are very optimistic going forward
• (3) Last quarter, the company raised guidance half way through - nothing this quarter
• (4) Stock has underperformed market rally for last month
• (5) Heavy insider selling as of late
• (6) Short interest has significantly decreased since last quarter
• (7) Volume has significantly dried up last month or so

Thanks for the note. All of your arguments seem solid. While I don’t know if items 1 through 3 have much bearing (they might - I just don’t know), I’m totally on board with ideas 4 through 7…… #4 and #7 in particular. A chart of Scotts Miracle Gro will easily illustrate what’s going on here.

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———————————————————————-As you can see, SMG - though up a little over the last two weeks - has indeed failed to rally with the rest of the market. You can also see that volume has been getting thinner and thinner on the way up…. a major red flag.

At the very least, volume should stay steady during rallies, or ideally, increase as the rally progresses. In the case of Scotts Miracle Gro though, the buying volume (blue bars) have been getting shorter and shorter. Eventually, there won’t be enough buyers to even keep the stock propped up at current levels, let alone higher levels.

The only thing we’ll add is that SMG actually hasn’t started to unravel yet. And, as we all know too well, what ’should be’ and what ‘is’ can be tow different things for a very long time. For that reason, we’d simply suggest waiting for Scotts Miracle Gro shares to slilde under one of the several possible support lines (which we plotted) before turning this idea into a trade. That’s just my two cents.

As far as our opinion of the idea though, I think this reader found a great setup.

If you’re not registered for our free newsletter, this is what you missed today. Don’t miss out on any more money-making opportunities… subscribe today. 

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9/29/2009

Where Are All the Penny Stock Trades?

Filed under:

• General
• Street Smarts

— SmallCapNetwork Editor @ 2:37 pm

We’ve mentioned this before, but we can’t say it enough… if you’ve got a question or suggestion for this site, please send it in. We read them all, and respond to every legitimate one. We got this one recently specifically about penny stocks, and why we don’t look at more of them.

The reader writes…

Dear Editor, Just a quick question about the Penny Stock Analysis section on your site. I wondered why most of the stocks are above one dollar rather than penny and/or sub-penny levels as the section implies? I am always looks for start up companies with good products or services that I can invest in with the potential make a nice profit. It would be nice to get your take on up-coming companies who have a chance to go big rather than stable companies who are already turning a profit as in your Small Cap Stock Analysis, which already does this. Just a thought and thanks for your valuable info!

Thanks for the note and great question.

The short answer is, given the choice of making some high-odds money versus swinging for the fences on a few penny stocks that will probably not pay off, we’ll take the former. And, those have been our only two viable choices of late.

The long answer is a little more complex, but still worth discussing.

We’ve had this discussion internally recently….. the choice between focusing on stocks priced under $1.00 (or comparable small caps) versus the choice of trying to just buy low and sell high no matter what the share price. IN THE CURRENT ENVIRONMENT, we’ve been more of the mindset that making some money is more important than scouring through an ocean of true penny stocks just to find a very rare gem. (Not that they’re all ever collectively healthy, but in a normal environment, at least some penny stocks have a shot at producing returns)

Oh, don’t hear us wrong… most penny stocks are crap most of the time. Right now though, almost all of them are crap all the time. Since we face the exact same headaches you do (like manipulation, bad information, inconsistent volume, etc.) when it comes to finding good sub-$1.00 stocks, we’re not going to try and squeeze blood out of  a turnip.

Or, think of it like this….. we’d rather have a 70% shot at a 50% gain instead of a 15% shot at a 300% gain.

We’ll probably stick with the favorable risk/reward scenarios of higher-priced stocks for a while longer, but as the economy continues to strengthen, we expect to find more and more penny stocks worth a look.

Something else to bring up (though the reader didn’t specifically mention it)…. it should be something of a given that we’re not likely to issue a short-term, ’swing’, or day trade alert for any penny stock. We just have too big of a list to mail to, and we have to take a little too long to craft a message to do so.

We frequently talk about penny stock trade ’set ups’ in the community articles though, so you can find those kinds of ideas there. As for what we’ll be focusing on on the newsletter, it will probably be more of the longer-term (days, if not weeks) penny stock trade picks.

Bottom line? Be patient - they’re coming.

If you’re not signed up for the free Small Cap Network newsletter, then you’re not going to hear about any of the penny stock picks discussed above. Sign up today.

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9/23/2009

A Map of Global Debt - Which Country Owes the Most?

Filed under:

• General
• Street Smarts

— SmallCapNetwork Editor @ 10:49 am

I stumbled across an interesting tool The Economist rigged up that shows - nation by nation - who proudly own the most debt. As it stands right now, the world owes a total of $35 trillion. Who owes the most and the least? Check out the map to see.

http://buttonwood.economist.com/content/gdc

I don’t know of any particular use this will have to us as investors, since the world is so co-dependent, one country’s massive debt will affect all markets. Still, it’s worth knowing who’s not getting crushed by a mountain of bills.

Have fun.

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9/22/2009

Is it Time to Take a Little CEL-SCI (CVM) Off the Table?

Filed under:

• General
• CVM
• Hot Stock Picks and Trading Ideas

— SmallCapNetwork Editor @ 9:11 am

It’s hard to believe that CEL-SCI (CVM), which was only trading at $0.27 when we suggested it in January, has rallied more than 600%, and is currently priced around $1.85. THAT is the reason we focus on small and micro cap stocks… big winners are uncommon, but when you do latch onto one, wow!

That being said, I have two business items to take care of before we go any further.

1. Just for the sake of smart trading, I think it’s time to at least take partial profits on CEL-SCI, even if temporarily.
2. Just for the sake of disclosure, I want to make sure there’s no misunderstanding that this site has an indirect compensatory relationship with CEL-SCI.

First things first.

Not only have CVM shares rocketed past resistance around $0.80 recently, today’s peak of $2.10 also matches multi-year highs for the stock… not that it wasn’t deserved. The company’s swine flu technology (LEAPS) may indeed be a game-changer not just for the fight against H1N1, but also a game-changer for the company’s stature in the biotech community. (The U.S. government is interested, for cryin’ out loud.)

Still, a triple-digit rally is a tough thing to hold onto no matter what the cause. So, between the potential brush with long-term resistance and just the sheer size of the recent pop, it may be a smart move to take some profits on CEL-SCI here. (continued below)

Just to be clear, I’m a long-term bull on CEL-SCI. I would be even if we hadn’t picked it in January. I’m also interested in preserving gains though, and my defensive senses are just telling me to shrug of the swine flu euphoria and be smart.

If it’s the wrong move, you can always buy it back later. In fact, the company’s Multikine cancer treatment alone (I think) makes the per-share price worth more than $2.00. That’s a long-term proposition though.

That being said - and not that it matters at this point - you should know that in January, this site received shares from CEL-SCI to present the opportunity to our readers. Since then the entire format for this site has changed; we’re now ad-supported and sponsor-supported, and those shares were transferred to a sister site. So, we still have a vested indirect interest in CVM shares… albeit very indirect

So what? Well, there’s really no ’so what’ to it. We’re clearly not pumping the stock - we’re telling you to lock in profits while you can before a pullback. We’re not even ‘covering’ the stock anymore. We’re just answering any potential questions that may pop up from this follow up discussion. (Normally we’d just drop the coverage and topic altogether, but this is important enough to discuss.)

In any case, that’s what we see right now - simply a chance to lock in a near-term gain, if not for your whole trade, then at least part of it. Just something to think about.

By the way, if you missed out on the bulk of the CEL-SCI (CVM) gain because you didn’t get our initial recommendation, don’t miss out again - subscribe to our newsletter today.

–

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