I’ve mentioned a couple of times that a true market bottom would be marked by a huge number of stocks hitting new lows on the New York Stock Exchange. We’ve been getting closer to the ‘too many’ level over the last few days, and we really got close yesterday. But, we’re not quite there yet.

We saw 622 new NYSE lows made on Tuesday. That’s a ton. If this were 2005 that would be a great sign of a bottom. This is 2008 though, and we’re trading in the shadow of a major bear market move - a lot of stocks are or should be hitting new lows with the market at or near 52-week lows. (We’ve seen days where close to 1000 stocks were hitting new lows, and that was well before we got into this shape.)

In other words, I don’t think we’ve seen a short-term capitulation yet. We’re close though.

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I won’t dive all the way into the discussion this time around, since I’ve been analyzing the daylights out of this chart for days now. The one thing I was most interested in - potential support somewhere around 1260/1275 - has indeed materialized as support for the S&P 500. The chart below tells the tale. Take a look…it’s pretty obvious.

So what? Well, there’s no ’so what’ just yet…at least not one we didn’t know about. My only message is just to not make any assumptions. The market is holding up here, so jumping into bearish trades is something of an unmerited risk. In the same light, it’s not like the market has bounced off this support line either. No, this is indecision taking shape when push came to shove.

My expectation is still the same - I’m looking for the SPX (and all indices) to rise slightly in the wake of a harsh dip. I’m not counting on a full-blown rebound until the VIX spikes. That may indeed happen soon, but we don’t know that it will. Still, I’m more trusting of the VIX’s clues than I am the market’s hints….the market’s hints have been misleading of late.

Some of you have asked how we’ll know if the bullish effort is a fake-out or for real. I suggest using what I’m using - the 20 day moving average line. I plotted it on black on the chart. If the S&P 500 moves above that level, I’ll be more open-minded about a rally. (Even then, the 20 day line has only been mediocre in this role lately.)

However, I stand by my early opinion….until the VIX spikes, I don’t think the bulls should dig in too deep.

Stay tuned.

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This morning I mentioned the Dow Jones industrials were the first to crack - to slip to new 52-week lows. As of right now, the S&P 500 is next in line…and on the verge of doing the same. It’s getting mighty ugly out there.

The key level to watch is 1272. That’s where January’s rebound was prompted. Though we traded under 1272 in March, we never actually closed under that level. Today’s low so far? You guessed it….1272. I think we could tolerate trading under it; I don’t think investors will be able to tolerate closing under it.

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The Dow Jones Industrial Average ended up being the first to fall. You most likely know the Dow sank under March’s lows on Thursday. What you may not know is the Dow is also now almost at 2-year lows. Ouch! Had the blue chip index actually managed to find support at 11,600 or so, I think the Dow could have salvaged itself. However, I think the technical breakdown at this point is too great to easily overcome.

As a result, I don’t think it would be irresponsible to start looking at previous support levels. The only one I found was 10,700…more than 700 points below Thursday’s close of 11,453. Double ouch!

As always, nobody really knows what’s going to happen…that’s just the likely possibility in my view. It’s not fun to think about, but I’m not going to try and blow smoke up your you-know-what. You can get sunshine and roses anywhere else on the web. We want to be a source for realistic and legitimate opinion (even if we’re wrong sometimes).

By the way - and here’s a scary thought - the Dow is back under its 2000 peak level of 11,750. That’s eight years of blue chip index investing washed down the drain. These companies are supposed to be the biggest and best bellwethers? Whatever. Being big and old didn’t help you at all since 2000.

There’s a little good news in all this….even if temporarily. The other major market indices aren’t getting punished quite as badly - at least not yet anyway. Look for comments on those indices later today.

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No surprises here…Ben Bernanke thought 2% was good enough, though again tried to talk down inflation without actually doing anything about it. The market saw it coming too. The rally today occurred in front of the announcement; we’ve really not gone anywhere since then.

What I said yesterday in the newsletter still applies - I still think we have more downside to go, yet stocks were due for some relief from the selling. I was going to give traders a day or two (with or without the Fed’s help) to get it out of their system. The only thing today’s news likely did was to accelerate the move.

Bottom line - sit tight for today, and maybe even tomorrow. If/when we make a directional call, it will only be after all this volatility has been burned off. We’ll let you know exactly when we’ve seen it happen.

By the way, here’s the S&P 500’s intra-day (5 minute) chart. It’s pretty obvious when the Fed made the announcement. Let’s see if this morning’s buyers are going to be vindicated by 4 pm EST. I’m guessing not.

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I really hope you were listening (ok, reading) on Thursday morning when I posted a blog entry about the subtle hints being dropped by the VIX as well as the market’s indices. With the VIX on the rise and the market sliding under previous support, I had a feeling we were going to see things take a turn for the worse.

Though stocks didn’t move much that Thursday, they got whacked on Friday (you can thank me later). Today’s been tepid. However, I do want to let you know I still see more downside in store.

What do I see exactly? The same as before - the VIX is pushing higher, and the S&P 500 is pushing lower. Here’s the killer though, if you’re bullish…..the VIX has tons of room to keep moving higher before a likely ceiling is met. Similarly, the S&P 500 won’t find a meaningful support line (now) until 1275.

And what about beyond that? A month ago I would have contemplated being bullish and buying a dip to that support line. Now I don’t know. Economically there’s a light at the end of the tunnel. Investors don’t care though, and that’s the key. 

On that note, I’ll now concede the first quarter pullback - though healthy - really wasn’t enough to drive the proverbial nail into the coffin….a capitulation. Once that happens, then we can truly start to rebuild stock valuations from the ground up.

If 1275 fails to hold up as support, I’m expecting a pretty decisive selloff that will do just that - force us to a bottom. The bearish trip to that bottom should be a trade-worthy move for puts or shorts (or bearish funds). Simultaneously, if the VIX breaks past 24.50, it could really start to rally, which would be bearish for stocks.

I guess ‘Sell in May’ was decent advice after all.

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A couple of days ago I really thought we were hitting a short-term bottom, start a trade-worthy bounce higher, and then re-start the bigger downtrend. Looks like the market by-passed the ‘bounce’ part and dove straight into ‘more downside’. Stocks got trashed yesterday, and aren’t doing all that well today.This week, however, I think something’s become clear…it’s a little too easy for stocks to sell off, and any bullish days we do manage to make can’t muster any follow-through. That’s two steps backward and one-step forward, which is tough to trade in any direction.

As such, there are no ‘trends’ to speak of unless you step away and look at a weekly chart. That trend, by the way, is bearish.

As is stands right now, I’m more inclined to remain in the bearish camp. Why? Two reasons. One is the VIX. The VIX is starting to trend higher again. The other reason is real results; the Dow and the S&P 500 have hit new multi-week lows today. Nothing speaks more loudly than actual numbers.

Like I said though, the subtle clues are easy selloffs, and challenged rallies.

If the S&P 500 closes under 1324 today (or sometime soon), I think that’ll pretty much deflate any hopes of a near-term recovery. Why 1324? That’s been a support level a few times recently. If that happens, we’ll need to see enough selling to create a mini-capitulation, which will likely be signaled by a VIX pop up to the 30 level. Needless to say, that leaves some room for more downside.

Keep an eye on 1324. If it fails as support, look for a revisit of 1271. More as things develop.

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Despite Friday’s firm rebound, most indices still finished in the red for the week. For the bulls though, at least they finished pointed higher. Any chance of upside follow-through? Based on what I’m seeing, yes….though I wouldn’t bet the farm (and I wouldn’t keep my bet out there too long).

I want to briefly touch on each index, though it’s the aggregate of my viewpoint on all three that I want to convey. Let’s start with the NASDAQ.

The low of 2388 last week was right in line with a 38.2% Fibonacci retracement line from the composite’s recent peak of 2550. We watched the index push off that line pretty well, and we don’t see any ceiling again until we get back to 2550. So, that’s the outlook - a 45 point move from where we are now.

As for the S&P 500, Fibonacci lines came into play, but not the 38.2% retracement level. The SPX didn’t find support until it touched the 61.8% retracement line. Still, the strength of the push off that line suggests more upside is on the horizon. 1372 might be a short-term hurdle, but beyond that, we’re looking for a move to 1440.

The Dow’s chart isn’t as clear, though shaped basically the same way. So, we won’t display it here. Instead, I want to show you something that I’ve been talking about quite a bit lately….the VIX. More importantly, I want to show you why it’s at the heart of my short-term bullish stance.

Finally, we’ve seen the VIX not only not move higher, but also actually move lower. (It had stalled around 24 for about a week.) With confidence level starting to rise, some money is flowing back into stocks. More importantly, there still seems to be room for the VIX to move lower before a floor is met….or re-met.

I’ve laid the VIX (blue) on top of the S&P 500 on the chart below so you can see how well they’re inverted with each other. Even though stocks started in the red today (Monday), I think in the bigger picture there’s still some oversold pressure that needs to be burned off.

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Wow. For a while it seemed like the market was going to hold its ground on Wednesday in an effort to regroup. The bears eventually vetoed the plan though, sending the indices to new multi-week lows (or at least the lowest closes in weeks).

Errant, or omen? I find myself trapped somewhere in between. Based on the current momentum, I have to be bearish (’The trend is your friend’ and all that rot). However, there’s that nagging voice in my head that’s still saying ‘a 3.9% dip in three weeks is a little too much’.

The answer I have for the voice (does answering myself make me schizophrenic?) is that we’ve seen it - and worse before….in Q1. So, I’m not going to assume anything at this point.

That said, the voice is basically right if you’re playing the odds - this is a little too much, too fast. I’m inclined to look for a brief bounce, though not necessarily a big one. And, I sure wouldn’t want to test the theory without a little more evidence (i.e. I’d only want to go long/bullish after a day or two of upticks, just so I knew the losing streak was broken).

The killer for me is still the VIX. Why hasn’t it moved higher while stocks have been getting slammed? I admit it - that’s one of the big reasons why I’m not all-out bearish…traders really aren’t expressing a growth in fear, according to the VIX. If you look closely, the mid-24 area for the VIX has been resistance before, setting up short-term pops for the market.

Anyway, here’s how I’m playing it using the S&P 500…

If the VIX does indeed make it past that short-term ceiling of 24.50, and the S&P keeps sinking, I’m bearish. If the VIX pulls back under 22.30 or so, AND the S&P 500 closes above 1370, then I’m bullish. (A move above 1386 would be hugely bullish.)

In the meantime, all I really want to do is wait and see how this plays out, so I don’t plan on adding any new positions. The gambler in me is itching for a bullish swing though, not to last more than a handful of days.

Stay tuned to the blog, because there are a couple of other factors at work right now. I’ll get to them later in the day and/or tomorrow.

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If you want to see an exception that proves the rule, look no farther than today’s action within the Dow’s 30 stocks. Just yesterday I was making my case against the financials in the Dow Jones Industrial Average, and today the financials are leading. Figures. Actually, it means very little…my look was much ‘bigger picture’ than that. Anyway…

Yesterday’s study of the Dow prompted a few responses. We’ll address one of them today, since it will be a platform for me to reiterate something I mentioned Monday morning. Here’s Richard’s e-mail…

The DOW has just begun the next leg of a bear market that will probably last until the beginning of next year. I expect the lows of January and March to be taken out very soon.

Thanks Richard. Maybe. I do think we’re due for one more good correction. As crazy as it sounds, the market just didn’t experience enough pain in Q1…we’re still due. One more good shot should force a capitulation. I don’t think it will last through the year though. I’m thinking we’ll hit bottom by September - just in time for the usual Q4 rally. As long as (like you mentioned) March’s lows are taken out, that should prompt one last good humbling.

I don’t know if that will happen immediately though. I’m looking for a few more ‘up’ days from here - just enough to get everybody thinking all is well. I mentioned some key resistance lines on Monday morning as well, and those are still the levels I think we’ll start the rollover at (12,963 & 13,132). Maybe a week or so before that starts. Here’s my comment from Monday’s blog entry…

OK, with all of this on my plate….I’m thinking bullishly on the short-term (days) and bearishly in the intermediate-term (weeks). How bullish? For the time being, I don’t expect any of the indices to break past the resistance levels mentioned above.

That said, I assume nothing. If those resistance lines fall and the market takes off, I’m not going to fight it, rational or not.

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Just because you’re right doesn’t mean you have to say it right then. You’d think Ben Bernanke - a guy I’m less and less impressed by - would know that by now. Guess not. The Fed chief stated yesterday that rate hikes may be needed in the near-term to control inflation. The market started in the red today, and overseas markets already took their beating.

I’m not saying he’s wrong. In fact, I think he’s right. Nor am I saying it’s his job to worry about stock prices (because it’s not). Still though, given the impact he knows he has on the stock market - and the ripple effect it has on the economy - you’d think this guy would be a little more savvy.

With that off my chest, here’s a what-will-be-rhetorical questions for Ben Bernanke…

• Why now? Inflation has been on the high side of the scale for months. Why turn over the apple cart now? (You should have done it a long time ago.) Where were you six months ago?
• Has anything changed - economically - since when you started cutting rates? I’ll contend no, nothing’s really changed while rates were on the way down. Will things really get any better when rates go up?
• Is the trade-off really worth it? This might help inflation cool off, but is this going to kill the already-troubled housing market?

Like I said, there are no answers - only effects. And the effect looks bearish so far. If the market was going to have any shot at a rebound I believed it was going to be today. Instead, more support is apt to be broken. This does not bode well for stocks.

If yesterday’s lows hold up, then we might have a shot at moving higher again. If the market falls under yesterday’s lows, I think the bulls are going to throw in the towel. All we can do is sit and wait.

Good news so far though…the indices have indeed held their ground. The VIX has also not moved past yesterday’s highs. You’d think after Bernanke’s comments the VIX would be much higher (showing more fear), but maybe all of this was already priced in. In that light, the indices are actually pushing off of the early lows.

Anyway, yesterday’s lows acting as support is the key.

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I’m sure after Friday’s market blowout, we were all glad to have a weekend to put it out of our minds (and perhaps put us out of our misery?) Dips I can deal with. Selloffs of that magnitude, however, are scary in the sense that it reminds us how quickly things can spin out of control.

The good news is the market - through more than a century’s worth of organized existence - always reigns its volatility in. That’s not to say the market always rebounds after getting crushed. In fact, it doesn’t. It’s very rare for the market to string two horrific days together though. That’s why I’m looking for a little relief today. As a matter of fact, the futures are up as of the time I’m writing this. I suspect that will last at least through today…if not longer.

So, time to regroup. I’m still not sure where all the chips will fall. I have an idea (which I’ll discuss below), but first I want to look at the key factors dancing around in my head.

The VIX

The CBOE’s Volatility Index (VIX) made its biggest single-day gain it’s made in the last 14 months with Friday’s 26% rally. A once-in-14-months reading? Come on. Some fear is understandable, but a massive spike in fear in Friday’s market environment is likely to be an over-reaction. I’ll interpret this chart as bullish for stocks, once traders figure out they overshot.

Support & Resistance

You don’t need me to tell you just because all the indices are designed to be market proxies that they all behave the same. That being said, I don’t recall the last time I saw such a wide difference between the way the index charts were shaped. Two of them are distinctly troubled, while the other two are, well…technically still in an uptrend. The good news is, the two still in bullish mode are the two most apt to lead the market - the NASDAQ and the Russell 2000.

Stocks are pointed higher right now, so I don’t expect any support lines to be broken today. Here are the ‘zones’ I’ll be watching in the near-term though. Just bear in mind they all change a little each day. (Most of these lines are also seen on the chart.

• Index - Support/Resistance
• NASDAQ - 2450/2550
• Dow - 12,200/12,570
• Russell 2000 - 727/765
• S&P 500 - 1356/1396

Oil

What market commentary worth reading wouldn’t have an opinion on oil prices? I’ll keep mine short - I think Friday’s surge to new highs in crude prices was a combination of short covering and amateur speculation. The ultimate result was what I expect to be a blow-off top (like the one I mentioned in last week’s comments about oil’s chart).

Basically, traders plunged into bearish oil trades too soon. I mentioned previously there were two key support lines that needed to be broken before it was safe to say oil prices were on the decline. (I guess those traders don’t read the Small Cap Network.) You can see what they were/are for yourself by checking out that blog entry on oil’s chart; just be sure to adjust for any changes in the meantime.

Still, Friday’s explosive just doesn’t leave the chart anywhere to go.

Bottom Line

OK, with all of this on my plate….I’m thinking bullishly on the short-term (days) and bearishly in the intermediate-term (weeks). How bullish? For the time being, I don’t expect any of the indices to break past the resistance levels mentioned above.

Be sure to check back regularly, as I expect to have some new narrative every day while we work our way past all this volatility.

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After yesterday’s surprising-but-firm rise in the market, I really thought the NASDAQ was going to take off. The close of 2549.94 was the best close in months, and we had gotten past some significant resistance lines.

Then unemployment numbers came in. Not good. Actually, they weren’t as bad as the press is making them sound. It was the biggest monthly increase in 22 years. That’s bad, but on an absolute level, the unemployment rate of 5.5% is nothing we haven’t seen in recent times. It was the jump from 5.1% to 5.5% that has people in a panic. We were at 5.5% in the middle of 2004….which was also the middle of the bull market.

The actual number of jobs cut last month was only 49,000. In the grand scheme of things, that’s slightly on the low side of the scale.

So the question is, do you worry about the unemployment surge, or not? Most investors seem to be freaking out, based on the way the futures turned from positive to negative just a few moments after the data was released. I don’t want to repeat the same knee-jerk reaction though. I’ll let the charts tell me what’s likely to be the final outcome of the event.

Here’s how I’m seeing it for the NASDAQ…

First of all, I’m not going to be surprised if the NASDAQ closes in the red today. At the same time, I don’t think that necessarily means anything particularly bearish. My line in the sand (short-term) is the support line (black) that extends back to March’s low of 2155.42. It’s currently at 2485, and getting a little higher every day. As long as we don’t fall under that mark, I’ll retain my bullish bias. (If it does fail though, the next checkpoint is 2426.)

I think the key to any bullishness at this point is just hanging on to recent gains in the shadow of today’s news. The 200 day moving average line (orange), as you know, is a biggie for me. It’s at 2516 right now. If we can stay above that mark for a couple of days while investors forget about the unemployment rate, that’ll be good. If we can get above 2550 (which would be new multi-month highs), I expect today’s concern will be a faded memory.

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Along with using the ISE Sentiment Index as a market timing tool, I also like to look at the number of new highs and new lows for any given exchange. My preference is the New York Stock Exchange’s new high/low numbers, though the NASDAQ’s can be useful too. The only exchange in which I don’t see a great deal of value in the number of new highs and lows is the AMEX - just not enough breadth or depth there to get a good read. 

What’s my interpretation? This one’s actually a little less ambiguous in some ways, but more ambiguous in other senses, than the ISE Sentiment Index. Basically, I’m looking for a wild reading in the number of new lows to suggest a bottom has been hit. More than 500 new lows has been a good rule of thumb lately.

As for a short-term market top, I want to see about 250 new NYSE highs before assuming we’re poised for a pullback. (Bear in mind the new high test/standard is much less specific and difficult to time than the new low rule of thumb.)

Why these levels? Namely because they work. Check out the chart below…the new highs are in green, and the new lows are in red. Though not super-precise, the market timing strategy has caught most of the major turning points.

The reason I want to point it out now is the same reason I wanted to look at the ISE Sentiment Index today…we’re actually NOT seeing the extreme readings that would normally suggest a high has already been hit. That’s pretty stunning considering the size and speed of the recent rally. But, according to the number of new highs we’ve seen the last few days, there’s still room for more gains before the proverbial wall is hit.

As always, there are no guarantees, but plenty of annoying exceptions. The odds seem pretty clear to me though. Despite the fact that I’m still looking for a small pullback - on the order of 3% to 5% - my market timing tools still say more strength could be in store.

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Most of you know by now I’m a big fan of using sentiment tools like the VIX or put/call ratios to spot likely short-term tops or bottoms in the stock market. As you may also know, I’m a very big fan of the ISE’s (International Securities Exchange) call/put ratio as a contrarian tool. Why? It’s one of the most effective market-timing indicators I’ve observed during my too-many years in this business.

The reason I bring it up now is to tell you it says the market has not yet peaked, despite a couple of big gaps that carried stocks into what I feel is overbought territory.

Here’s the basic interpretation - when the ISE call/put ratio is at an extreme low, fear has peaked, and a bottom is likely to be in place. When the ISE call/put ratio is at an extreme high, investors are too complacent, indicating a likely top is in place. That’s the ‘contrarian’ part…going against the grain when nobody else seems to be. To really define what’s ‘too high’ and ‘too low’, I like to wrap the index in Bollinger bands (200 day).

As the chart below shows, the ISE call/put reading tagged all the major short-term bottoms. It wasn’t laser-like precision, but it was pretty close. All those lows are highlighted in yellow. The same goes for the tops, which are highlighted in blue. Take a look, then keep in reading.

See anything interesting? Despite the ridiculous rally last week, investors haven’t gotten cocky to the point of needing to be punished - at least according to the sentiment index. That won’t happen until we see a reading closer to 169. In other words, the market at these prices isn’t as terrifying as the media and pundits might have you think.

As always, no guarantees. However, the strong track record of the ISE Sentiment Index as a market timing indicator really gives me pause here….maybe there is more potential upside. Be sure to check out my other blog entry today, where I look at new lows and new highs as potential market-timing indicators.

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I’m not entirely surprised, nor am I particularly worried, to see index futures in the red this morning. The equity market’s heroic rise last week may have put stock prices a little too far ahead of their actual values. Having had a weekend to think about it, investors are experiencing a little buyer’s remorse…and Bank of America (BAC) was the catalyst. It’s still too soon to call a short-term top though; let’s just use caution and common sense here.

The biggest threat I see are two wide gaps for the NASDAQ Composite’s chart. The market might be able to tolerate one, but two big ones? I foresee enough selling to fill them both. Unfortunately, if both gaps are filled, it will also be the result of a big enough pullback to inspire more selling.

Bottom line - I don’t see now as the time to be proactive. Let’s observe early this week, and respond. I’ve got a feeling the euphoria is going to wear off soon. If the dust settles and the emperor isn’t wearing any pants, I don’t want to be around to see it/

By the way, Stockgroup Information Systems (SWEB) has added some nice talent to its board of directors. Janet Scardino is now helping steer the financial media/community site into the future. Her experience is top-notch too - should be a true asset rather than just a high-profile name to tout. Check out some of her CV….

• Currently the Chief Marketing Officer of The Knot Inc (KNOT)
• Former Executive V.P. of Reuters Group PLC (TRI) (many parallels to Stockgroup)
• Former Sr. V.P. of International Marketing for AOL
• Former managing director of Disney Channel Italy
• Former V.P. of International Marketing for MTV

Not a bad person to have on your side, huh? I think she brings something to the table that’s deliberately outside of the equity market world. Considering Stockgroup is ultimately targeting retail investors (even via their institutional offerings), Scardino’s experience could help hit that target.

Nothing else for this morning, though be sure to check the blog again later on today. There are a couple of themes I’m researching or gathering data for, and I should have these ready sometime within the next few hours.

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We’re still focused on finding and trading bulletin board stocks, despite the fact that large caps have dominated the news of late. Given their (large caps) impact on the overall market - including small caps - we want to stay on top of the major market trends. That’s why we’ve been looking at the major names the last few days….and today. We’re still huge small cap fans though. Sooooooo

Citigroup (C) wrote down $5.1 billion last quarter thanks to bad mortgage loans. [Insert generic sub-prime lamentations here - I’m tired of saying it]. Google (GOOG), on the other hand, appears to be printing money. So how’s the market digesting this mixed news? As the kids say these days, “it’s all good”.

I don’t think any of you will be surprised to hear me say the news is less important than the response to the news when it comes to getting a feel for where stocks are likely to go. Right now investors are seeing the glass as half full, which means they’re trying to think like buyers.

ALL THE SAME, I’m still not going to be impressed (i.e. going long) until at least two of the major indices can break above recent highs. Until that happens, we’re still only range-bound. [Insert generic discussion of range-bound markets here - I’m tired of saying it.]

That said, today may well be the day. I hate those lingering gaps though, and I don’t see where Google can go from here…it’s up 77 points this morning. Plus, it’s the last day of expiration week, so I don’t trust any move today. I definitely wouldn’t be buying into a rally just yet. In fact, I might short some things later today…or buy put options. Strictly speculative.

By the way, our bulletin board stock pick SpongeTech (SPNG) has gotten some big traction the last few days - on higher volume. I think this may finally be the kind of strength we’ve been waiting for. And, it’s been built on real results (i.e. sales and earnings growth). More of the same may be on the way. In fact, we heard of yet another marketing venue this morning.

Radio commercials for the car wash and wax sponge will soon start airing on two TalkRadio Network(r) channels….business, and lifestyle. I don’t have any details of the deal, but I do know that radio is a very cost-effective medium for advertisers.

The sales just keep on cranking up, as does the backlog. They blew us away last quarter with $1.3 million in sales - their best quarter ever. And, profits were a nice $188K. The thing is, that was before much of the marketing effort was in full swing. I don’t think revenues of $2 million or more are out of the question for Q2. I’m looking for earnings to increase proportionally. The radio ads will be part of the reason.

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I trust most of you caught my late blog entry yesterday that I bought QQQQ puts a few minutes before the close. That should pretty much tell you what I think our odds are of any real follow-through today. We may even open higher this morning (frankly, I hope we do), though futures are mixed as of the time this is being written. Either way, I just think 3%+ gains in one day creates too much short-term profit to pass up.

In the meantime there several comments I want to make about some of our companies (new and old). However, I first need to let you know….

If you like the new ‘Morning Call’ column and stock picks, that’s great. But, if you’re not receiving the e-mail version of the newsletter, then you’re actually missing out on some of our best stuff. Be sure to register today (upper right hand corner of the page)….for free. No name or credit card required - just a sincere interest in getting more out of the stock market.

Anyway…

CEL-SCI (CVM): I don’t know what got into CEL-SCI lately, but I like it. You could chalk some of the recent strength to broad market strength, but not all of it. There’s a short-term ceiling at 70 cents, and another at 74 cents. CVM has been as high as $1.70 a couple of times in the last four years, and the company was further away from commercialization then.

Tenet Healthcare (THC): Proof that patience pays off. Things looked bleak early in the year for this stock pick, but it became an overnight sensation on February 26th. More importantly, we’ve seen huge follow-through. If the $6.00 mark is broken (December’s high), I think it’s off to the races. The high for the last two days has been $5.87.

Spicy Pickle (SPKL): The support at $0.80 was broken…not a total surprise. The level I mentioned worth watching was September’s gap at 71 cents. When-and-if that’s cleaned up, it could be new life for the stock.

New Stock Pick of the Day: Volcom Inc. (VLCM). This textile/footwear company is more than a little off the beaten path, but that’s part of the charm. The stock’s been getting trashed over the better part of the last nine months; they got a bad rap for a poor Q4, but we’ve seen some buying interest lately. Maybe that’s because the company’s actually doing well otherwise, and is a little undervalued at this point. Annual sales growth has been outstanding, and they’re profitable.

My favorite tidbit here though is relatively heavy short interest. About 18% of Volcom’s float is held as short positions. A little more upswing could juice some more of those short owners into covering, and create a decent rally.

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I’m really more of a trend trader, but after seeing today’s strong open and even stronger close, my intuition told me to sell into this ridiculous strength. So, I did. Well, actually I bought some QQQQ April 47 puts for about $1.84. I’m looking for today’s rally to unwind just like the last few have. This is the kind of move I’ve been talking about in the ‘Morning Call’ for a week. My bet is essentially that we’ll move back down to the lower end of the range again.

By the way, the VXN and the VIX both hit lower extemes today…a condition the market has not let persist for long.

I didn’t bet the farm - just a couple of contracts.

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I’m not superstitious or paranoid, but I’d swear somebody has to have a camera spying on me this morning and having a good April Fool’s laugh. It’s been a total scramble so far (my head is spinning), and it’s only 9:30 am EST (I’m an East Coaster). If you caught this morning’s newsletter, then you already know it. We saw four news items hit all about the same time. I’m not going to rehash them here - just click here if you want to see what’s going down.

Anyway, the ‘Morning Call’……you know what? Let me rant a little first.

Most of you know by now I’m inherently skeptical, but perpetually open-minded (which may be why I need some sort of therapy). I really want to like some of the companies we follow, or even have followed in the past. I’m brutally honest, but like I said, also open-minded. So, when I learned Stockgroup (SWEB) would be announcing earnings and hosting a conference call yesterday afternoon, I was planning on taking an unbiased look.

Sometimes though, a company uses up all my patience, and/or taints their status with me.

Just for the record, their full-year earnings were supposed to be released on March 4th. They were delayed, as was the conference call, until March 31st. Fine. March 31st came. No earnings came out. The call that was supposed to start at 4 pm EST was postponed; the company let people know via a press release issued at 4:44 pm EST….nearly an hour after the fact.

Earnings were finally released at 6:00 am EST Tuesday (today). However, the company sent the wrong press release. The word ‘unaudited’ should have been removed from the headline, so they sent a corrected version at 8:44 am. They also changed the conference call start time from 9:05 am to 9:00 am…..about 15 minutes before the event began.

I’m sorry, but what the *$%#@ is going on up there? I know stuff happens that’s out of your control sometimes, but quarterly reports and press releases are fairly routine stuff. If they can’t do those simple things, I can’t help but wonder what else is a total cluster-#$@*& for the company. Geez.

OK, as far as the market is concerned, today’s strong open (and gap) is bearish for me, though only for the day. I refer you back to the message I’ve been sending in most of the morning calls the last few days…traders are wishy-washy, and can’t commit to a trend. The result is a range-bound market. So, I’m not impressed by the early gains.

Pick of the Day: ICT Group (ICTG). Nice chart…breaking above some key resistance lines. Terrible fundamentals, yet, the stock is still pointed higher now. This is not the kind of thing I see as an investment…at least not yet. It’s strictly a trade (and a high risk one at that). I guess I’m just a sucker for stocks that are at multi-year lows, but also look like they’re getting turned around. I’d do some serious research before doing anything else though, as I know very little about this company…there may be a ticking time bomb buried in the books.

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